Some ethanol plants have stopped production because of the drought. Dave Loos, technology and business development director for the Illinois Corn Growers Association, said the reaction is about more than just a lack of corn for production. He says it’s market conditions such as corn prices, natural gas prices and the price of ethanol on the market compared with gasoline. Loos says some plants could shut down.
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“Every plant is different based on its design, based on when it came on production, how much debt it’s carrying,” Loos said. “It’s very possible that some plants could shut down in the future. That would moderate the price of feed stocks.” There are at least 12 ethanol plants in the state and hardly any of the representatives will comment on production. Center Ethanol in Sauget produces about 50 million gallons a year. President Barry Frazier said the plant isn’t seeing an impact from the drought on production.
“Corn prices obviously have moved higher as a result of the lack of rain, but it hasn’t impacted our ability to source corn,” Frazier said. “We’re concerned about the overall level of production, which is yet to be determined, but we feel like there will be ample supplies to meet the need of the renewable fuels standard.”
Loos said ethanol plants can adjust quickly to market conditions. “They can turn down (production) a little bit, they lose some efficiency when they do that, but they can turn down if it makes economic sense,” Loos said.
The USDA and Loos say the full extent of the drought’s impact on fuel production won’t be known until harvest. Loos said the recent oil spill in Wisconsin, refinery problems in the Midwest, and a refinery fire in California all led to higher gas prices.