?Ethanol plants are bleeding money.?
That was the Statement form Growth Energy CEO Emily Skor that really put things into perspective. The industry is hurting across the board. 2020 was starting out as supporters had hoped. Things looked like they were on the right path for the biofuels industry. Trade wars with China were being settled, at least for the agriculture sector. These trade wars were blocking market access for ethanol into China. There was also the ruling by the 10th Circuit Court which stated that the Environmental Protection Agency had illegally granted small refinery exemptions to three plants in 2016.
Things were finally looking up.
Then March happened.
More after this
Coronavirus hit the U.S. hard in March, and it took some time for the government to respond. Millions of people are either out of work or working from home. With many destinations deemed unessential, there is little in the way of activities for people to do, even if they weren?t being encouraged to just stay away from one another. This means there is very little demand for fuel. This means there isn?t as much ethanol being purchased.
It isn?t just COVID-19 that has the industry backed into a corner like a punch-drunk boxer. Saudi Arabia and Russia have gotten into a price war over oil and have flooded the market. This coupled with the loss of demand is why you are seeing gas below $1.50 a gallon in many gas stations. It is a combination from which it is hard for any industry to recover.
On Tuesday, Senator Grassley (R-IA) announced he was joining with Senator Tammy Duckworth (D-IL) and Senator Joni Ernst (R-IA) and many other Senators in calling on USDA Secretary Sonny Perdue to help the biofuels industry. Grassley said these industries have been drastically hurt.
Senator Grassley cited the Department of Energy?s efforts to add oil to the strategic reserve and help that industry through the sudden downturn. The Senator wants to see similar stability brought to the ethanol industry.
The letter cited the far reach the strength of the ethanol industry has for agriculture in general. They cited the support it gives the corn and soybean markets.
?Ethanol plants use 40 percent of all corn grown in the United States. Among other feedstocks, biodiesel and renewable diesel producers currently use over 8 billion pounds of soybean oil a year, creating demand that adds 13 percent to the cash price of a bushel of soybeans.?
What this help will look like is still up for negotiation. The point being made is that something must be done for the industry to survive during this tough time.
In addition to Grassley, Duckworth, and Ernst, the letter is cosigned by Sens. Tammy Baldwin (D-WI.), Deb Fischer (R-Eb.), Amy Klobuchar (D-MN.), Roy Blunt (R-MO.), Dick Durbin (D-IL.), Mike Rounds (R-SD), Tina Smith (D-MN.), Josh Hawley (R-MO.), Sherrod Brown (D-O), Ben Sasse (R-NE.), Jerry Moran (R-KS.) and John Thune (R-SD).
The full text of the letter follows or can be found HERE.
