News
Ethanol producers in ‘challenging period’
The ethanol industry faces “a challenging few months”, but the long-term outlook for ethanol has not changed.
So says Todd Sneller, administrator of the Nebraska Ethanol Board. He says the current glut of ethanol on the market, combined with weaker demand for motor fuels, are the main factors.
But Sneller the demand slowdown was not unexpected.
“I think the ethanol sector looked forward, at 2012, as having the first and second quarters be a challenging period,” Sneller says. “They tried to make adjustments for it, to the extent that they can do that, by controlling production to meet market demand and making sure that they continue to produce and market ethanol in the most efficient ways possible.”
But Sneller says with the Renewable Fuels Standard in place, plus continued good export demand for ethanol, the industry remains strong.
“It will continue to be a challenging period, but not one during which we start to see massive reductions in ethanol production by any means.”
The Midwest Renewable Energy ethanol plant at Sutherland, Nebraska has just announced that it will temporarily cease production until the market improves (see related story). Sneller says other plants may also use the demand slowdown to do routine maintenance work ahead of schedule.
AUDIO: Todd Sneller (8:04 MP3)
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Let’s see ethanol is running approximately $2.25 wholesale and RBOB is about $3.00 (and WTI is @ a $100 and Brent is about $120) that’s about a 75 cent difference. It shouldn’t matter whether there is a Renewable fuel standard or not market forces should support using ethanol. There’s probably a glut with the runup to suspending the 45 cent/gallon incentive so market forces should click in later in the year. Ethanol producers shouldn’t be pushing the panic button, I mean they just came off a stellar year.
Todd Sneller, Administrator of the Nebraska Ethanol Board and I worked together for several years on getting ethanol fuels off the ground in the early days during the 1970’s and 1980’s. I was the first Administrator of this group and one of the lead promoters of ethanol fuels back in the day. I live in Western Colorado now and do envrionmental and renewable energy lobbying at the state and national level. My question for Todd and the ethanol industry right now is—can the federal government purchase the excess ethanol fuel for the military use and for other government agencies? Can this be part of President Obama’s renewable energy program? I don’t know if this is a profitable move, but it might keep could keep ethanol plants in operation. Since the ethanol subsidy is gone, maybe the government can step in and buy ethanol fuels for a five-year period or longer. Maybe lock them into a specific time period. Best Wishes to the ethanol industry from a long-time supporter.
Randy Fricke
New Castle, Colorado