Biofuel bonanza

Posted on Monday, May 22nd, 2006 at 10:20 am by JTE

I like biodiesel. I might like ethanol even better. I will always like bikes and mass transport the best.

Thousands of Iowa’s Corn Farmers See the Future in Fuel
Growers Investing In Ethanol Plants Across the State

By Peter Slevin
Washington Post Staff Writer
Sunday, May 21, 2006; A03

GOLDFIELD, Iowa — The complex looks like a refinery and smells like a bakery. From a pipe at the back flows a clear liquid that could be confused with vodka, except it can power an automobile and, its backers hope, propel ordinary Iowans into biofuel heaven.

The pungent liquid called ethanol, made from corn, has Iowa farmers giddy. Inspired by high oil prices and changing sentiment in Washington, thousands of investors are pouring tens of millions of dollars into new facilities, such as the gleaming $90 million plant here.

“We’ll be the Arabs of the Midwest,” mused John Becker, manager of a farm cooperative in Craig.

Ethanol prices are surging across the country as legislators add incentives to spur usage and fleet owners rejigger their fuel orders to cope with $3-a-gallon gasoline. The boom has meant profits for early investors, corn farmers, truckers and suppliers, even as financial analysts and government officials hurry to assess the fuel’s staying power and its impact on such matters as farm subsidies and national security.

With national capacity more than doubling in the past three years and set to grow an additional 50 percent by the end of 2007, the wave is moving fast — from New York, where Gov. George E. Pataki (R) this month announced construction of the state’s first ethanol plant, to California, where Microsoft Chairman Bill Gates recently invested $84 million in Pacific Ethanol Inc.

Iowa, the top corn-producing state, is the nation’s ethanol leader, generating 25 percent of U.S. ethanol in towns such as Coon Rapids and Steamboat Rock. In addition to 22 ethanol refineries in operation, the state has seven under construction and at least 20 are being planned.

The boom here has largely been a grass-roots phenomenon, fueled by clusters of growers, bankers and small-town professionals. Aspiring biofuel plant owners have been barnstorming the state, delivering investment pitches in firehouses, schools and community centers.

Six thousand farmers have bought in.

“There’s quite a bit of exuberance for the ethanol plants. They’re paying real good dividends,” said Rockwell City farmer Keith Sexton, president of the Iowa Corn Growers Association and an investor in four biofuel refineries. “It’s coming on board almost faster than a person can keep up, unless that’s your day job.”

The state legislature this year passed incentives designed to increase the percentage of ethanol and biodiesel in Iowa fuel sales to 25 percent by the end of 2019. Three of every four gallons of gas sold in the state contain at least 10 percent ethanol, although most of the state’s production is shipped elsewhere.

Ethanol is the fuel Henry Ford originally envisioned for his mass-produced Model T automobile. It is blended into three of every 10 gallons of gas sold in the United States, although its percentage of the overall national fuel supply remains tiny. The clear liquid burns more cleanly than gasoline and, unlike that of crude oil, the potential supply is virtually unlimited and close to home.

In signs that big-time players are betting on ethanol’s future, Illinois-based agribusiness giant Archer Daniels Midland Co. recently announced a large expansion, while car makers are increasing their commitment. General Motors Corp. says it will manufacture 400,000 more flex-fuel vehicles, which will join more than 5 million on the road.

Big manufacturers are also making engines that can run on biodiesel, a smaller but fast-growing segment of the industry.

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