Corn Ethanol Industry In The Tank

Low fuel prices, high corn prices, and a new CA regulation that penalizes the energy intensity necessary to convert corn to fuel are hurting the industry.
April 9, 2009, 9am PDT | Irvin Dawid
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"California's largest ethanol producer, Pacific Ethanol of Sacramento, closed its plants in Madera and Stockton earlier this year, laying off nearly 80 people in the process. The Stockton plant had been open less than five months.

The firm warned investors last week that it could run out of cash by the end of April. The nation's second-largest ethanol producer, VeraSun Energy Corp. of South Dakota, went bankrupt last fall.

Ethanol companies went on a plant-building binge while oil and gasoline prices were still rising. Because ethanol is blended into gasoline, the prices of the two fuels are linked, and ethanol companies wanted to cash in. But too many biorefineries opened, swamping the market.

Then the industry was hit by a double-whammy. Corn prices rose, cutting company profit margins. Then gas prices collapsed, wiping out what little margins were left."

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Published on Sunday, April 5, 2009 in San Francisco Chronicle
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