Ethanol industry’s record profits

March 7, 2014

As you read this, the Environmental Protection Agency (EPA) is currently sifting through thousands of comments debating the merits of the EPA’s proposal to reduce the corn ethanol mandate for 2014.

The ethanol lobby is fighting hard for to defeat EPA’s proposal and maintain the status quo. Upon the announcement of the proposed reduction, the industry threatened to sue the EPA if they scaled back the Renewable Fuel Standard — a power that is well within their right, rarely used and the foundation of the much-touted “flexibility” of the policy.

For the effort that the Renewable Fuels Association is putting into lobbying, you’d think the industry was in dire straits…and yet:

The Minnesota Star-Tribune reported that “boom times are back in the ethanol business” and Financial Times writes “the US ethanol industry is enjoying bumper profits again, placing it in an awkward position as it battles plans by the Obama administration to scale back government support.”

According to Biofuel Benchmarking, an analytics service that tracks more than 40 U.S. ethanol plants, 2013 was the most profitable since the industry’s banner year of 2006.

“This reiterates that the industry is going to sustain itself,” said Paula Emberland, who manages Biofuel Benchmarking for Christianson & Associates of Willmar, Minn.

Michael Cox, an analyst with Piper Jaffray & Co. in Minneapolis, told the Star-Tribune that “ethanol’s strong showing illustrates how an industry launched with government subsidies now operates on basic supply and demand.”

And within the industry, producers are optimistic. Archer Daniels Midland: “We are expecting strong margins going into 2014.”

We can all agree this is great news. The market should determine how much ethanol is produced, not a mandate that unnecessarily eats up conservation land, drives up food prices, puts almost every car on the road at risk and demands more and more resources every year.

Tell Congress we don’t need a mandate.