Study: Without more government help ethanol plants could go bust

LINCOLN, Neb. (AP) — Ethanol producers have friendly government policies to thank for the current boom in the corn-based alternative fuel and will need more help from Washington to keep from going belly up in a few years, says a new study.

Without a federally mandated increase in ethanol consumption, small plants could stop being profitable by 2011 and be operating in the red in 2013, according to the study by David Peters, an agricultural economist at the University of Nebraska-Lincoln.
Large plants, meanwhile, could see profits cut in half in four years before losing millions of dollars in seven or eight years and being forced to rely on reserves to cover losses.

The study comes as Congress tries to craft an energy bill that addresses alternative fuels.

A Senate-approved bill calls for doubling annual consumption of ethanol to 15 billion gallons by 2015. The current requirement is 7.5 billion gallons by 2012, though actual consumption could meet that mark next year.

The study looked at economic prospects for two sizes of plants: those that produce 40 million gallons per year and those producing 100 million gallons annually. The plants’ prospects were considered for two scenarios, under the government’s current consumption requirement and the proposed, 15 billion gallon requirement.

Sioux City Journal