Ethanol Future Bright

RFA president remains optimistic on outlook.

Oil prices have backed off historic highs but Americans continue to pay for a dangerous reliance on petroleum and rising gasoline and energy prices. Bob Dinneen, president of the Renewable Fuels Association, states this reliance makes it imperative that the U.S. continues to build domestic renewable energy sources like ethanol.

"Ethanol's future continues to be bright," he says. "The need for domestic energy is greater today than it's ever been."

After the gold mine rush to ethanol in 2004, the slow-down in the fevered pace of construction is not surprising given current economics, Dinneen says. Additional facilities will continue to come online, especially as the demand for ethanol will be higher next year with the stepped up Renewable Fuels Standard, he said. He explains plants may not be paying overtime and rushing to bring operations online, but more production will be needed soon.

Dinneen states that current corn prices pose a challenging environment for anyone purchasing grain. Companies who have best managed the risk of buying feedstocks and selling in another commodity market are faring the best in today's market.

As farmers respond to higher prices, grain prices will respond and hopefully make for a more successful period moving forward, Dinneen says.

He adds that while gasoline prices are high, ethanol prices haven't followed suit. "Refiners aren't really paying the value for octane that ethanol provides. That too will turn around over time."

Looking ahead

One of the greatest challenges for the ethanol industry will continue to be a public relations battle.

"Politically there is a highly funded campaign to undermine growth of US ethanol industry," Dinneen says. Moving forward there will certainly be new efforts to reduce or eliminate incentives and mandates or to allow Brazilian ethanol to benefit from the tax credit designed to encourage domestic production.

"Political and public support for ethanol will continue to grow as well. I don't believe efforts will be successful," Dinneen says of the attempts to scale back ethanol incentives.

Dinneen says he is "certain others will want to challenge" the ethanol mandate. However, "EPA established a pretty high bar with this ruling. We believe that the Renewable Fuels Standard makes a great deal of sense. Efforts to waive it would be a real mistake."

RFA is also making sure the energy bill passed last December is implemented successfully. The RFS imposes new requirements for greenhouse gas benchmarks and encourages expansion of cellulosic ethanol. "We need to make sure regulations of implementing RFS allow for the continued evolution of this industry.•bCrLf


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