the un will prolly try and make it illegal to burn corn that starving children in africa could be eating... crimes against humanity and all that.
Posted on 11/30/2007 12:57:48 PM PST by thackney
NEW YORK, Nov 30 (Reuters) - Average U.S. ethanol margins slipped slightly this week as prices for the alternative fuel followed gasoline prices lower and as a glut could keep profits anemic into next year, an analyst said.
U.S. capacity to make ethanol has jumped a third since the beginning of the year to about 7.2 billion gallons a year but infrastructure to get the fuel to market has not kept pace. That has led to pooling of the fuel in the Midwest and kept ethanol weak compared to conventional gasoline.
"The purchasing power is in the hands of the oil refiners and blenders, which is not the historical trend for ethanol," said Ron Oster, an analyst at Broadpoint Capital, Inc in Missouri.
Midwest ethanol prices slipped about 3 cents to $1.97 a gallon since the middle of the month, following gasoline futures which fell about 15 cents to $2.25 a gallon.
High corn futures prices of about $3.80 per bushel have also capped profits and could limit them into next year. Corn prices could hit $5 a bushel next year on solid demand from the fuel and food sectors and as the weak dollar could boost exports, a Reuters analysis found this week.
The ethanol crush spread was steady at about 62 cents per gallon. Overhead, natural gas and transportation costs, however, have whittled down profits for average ethanol producers to only a few cents per gallon, while some producers are making no profits at all, Oster said.
He said consolidation in the sector, like Thursday's deal in which VeraSun Energy Corp said it would acquire US BioEnergy Corp should continue because larger companies can drive down transportation and other costs. "Bigger is better," Oster added.
Rail and truck transportation from ethanol producers to oil blenders has begun to improve, which could raise discretionary blending, or mixing more ethanol into gasoline than is required by law. That could help profits in the longer term.
Ethanol markets have opened up in Florida and North and South Carolina, as fuel regulations have eased. In addition, the farm bill in the U.S. Congress is considering a Renewable Fuels Standard that could call for for 8.5 billion gallons of renewable fuel by 2008 and 36 billion gallons by 2022.
But Oster said any RFS should mainly benefit producers of next generation cellulosic ethanol, which have not yet begun to make commercial levels of fuel, not traditional corn ethanol producers. Ethanol margins should be weak into next spring when gasoline demand ahead of the summer driving season is expected to rise, he said.
I don’t see how they can blend more without adding to the infrastructure, we are at blending capacity right now.
I don’t know a gas station that sells E85, nor a car that I want to drive that runs on it. Now, if there’s a glut and it is selling for a buck-fifty a gallon, at a station near me, please let me know. I’m on board.
2.87 in Houston.
Although it semms ulikely, I think we will be exporting ethanol in the next five years.
look here for the real price
http://ethanolmarket.aghost.net/
Even at that, there would be something in the range of two bucks a bushel crush margin.
We burn food for fuel, and strive to use less of our 250 years worth of domestic coal. Meanwhile, we send hundreds of billions of dollars each year to the Sheiks and Chavez.
We are a nation gone mad.
the un will prolly try and make it illegal to burn corn that starving children in africa could be eating... crimes against humanity and all that.
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