August 7, 2012

Nebraska ethanol producers operating at reduced capacity

Nebraska's ethanol plants are operating at approximately 70 percent of capacity, well below near 100 percent levels in 2011, according to estimates provided by the Nebraska Ethanol Board.

Nebraska ethanol plants produced more than two billion gallons of ethanol from corn last year.

Nationally, production is down about 20 percent since the beginning of the year and is at a two-year low.

The Nebraska Ethanol Board noted that ethanol producers are responding to a changing market as drought conditions impact 2012 crop forecasts and corn prices reach record levels.

"This slowing of production is a natural response to drought related market forces and will not preclude the industry from achieving Renewable Fuel Standard (RFS) benchmarks," according to Steve Hanson, board chairman.

He said higher than normal ethanol stocks and a large number of existing RIN credits for U.S. refiners combine to make RFS achievable well into 2013. Fuel blenders get RINs (Renewable Identification Numbers) when they use more renewable fuels than required – and estimates are that there is a surplus 2.5 billion RINs available, and if fuel blenders need more they can carry a deficit of RINs into the next year.

Hanson said waiving the RFS would have little effect on the corn availability, citing a recent study by the Center for Agriculture and Rural Development. That analysis concludes a total waiver of RFS would reduce corn prices by less than 5 percent and force only a 5 percent reduction in ethanol production.

"The RFS was created to reduce U.S. petroleum imports and it has done so very effectively," Hanson said. "In 2011, 14 billion gallons of domestically produced ethanol replaced 13 percent of oil imports and reduced the nation's trade deficit by $50 billion. For the first time in decades, less than half of U.S. petroleum demand was imported. In addition, Nebraska motorists saved more than $50 million in fuel costs due to the lower price for ethanol fuels."

Hanson also noted that the reliable supply of high protein distillers feed produced at Nebraska ethanol plants is an important component of livestock feed supplies in Nebraska.

The release included a reference to a study conducted by Dr. Ken Lemke, chief economist at the Nebraska Public Power District (NPPD). It said 7,700 Nebraskans are employed directly and indirectly as a result of the ethanol industry, and that it contributes more than $50 million dollars in tax revenues to state and local governments and $250 million is added to household incomes in the state.

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