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Friday, September 16, 2005

Environment - Ethanol stories today

Ethanol. Seth Slabaugh has two stories today in the Muncie StarPress. "Ethanol plants called corn 'vacuum cleaners'" is the headline to this one, which reports:

TIPTON - Four ethanol plants have been announced in Blackford, Grant, Wells and Randolph counties, but can one region support that many?

"One important consideration is, wherever they are built ... they do tend to pull the vast majority of the corn within a 50- to 60-mile radius," said Mike Jackson, moderator of a bio-fuels panel discussion at Indiana Farmfest. "The fact is, they tend to be vacuum cleaners for corn in the area because they do in fact raise corn prices." Jackson is the founder of ABG Inc., an Indianapolis agri-business consultant.

"We're in the midst of a $100-million poker game," said Delaware County grain farmer Joe Russell, referring to the four possible ethanol plants in this area of the state.

Russell, who attended the panel talk, is trying to rezone 806 acres of land in Delaware County to attract an ethanol plant or soy biodiesel plant.

He suggested drawing 40-mile circles around each of the four possible ethanol plants and seeing where the circles overlapped.

Russell said he believed East Central Indiana could accommodate four ethanol plants if every ear of corn in the region was sold to the four plants.

My question: Then how will we feed all the hogs?

The second story is headlined "Ethanol boom 'biggest thing since New Deal'". Some quotes:

TIPTON - Six to 10 ethanol plants will be built in Indiana in coming years, an official representing the ethanol industry predicted Thursday at Indiana Farmfest.

"We're going to build 70 new ethanol plants across the United States over the next six to seven years," said Larry Schafer, vice president of the Renewable Fuels Association in Washington, D.C. "That's a fact. And we expect six to 10 of those to be in Indiana."

Indiana currently has only one ethanol plant, but four more are under construction, and many more are on the drawing board, including projects in Marion, Hartford City, Bluffton, and Winchester.

Schafer and other experts on a panel were vague about whether East Central Indiana could accommodate four ethanol plants.

"We think this ... is so big that we call this the revitalization of rural America, the biggest thing to hit rural America since the New Deal back in the 1940s," Schafer said. * * *

Each of the 70 plants will cost an average of $75 million, employ 30 to 35 people directly, and infuse $60 million into the local economy annually, Schafer said.

The reason he's certain that 70 plants will be built is because that's how many it will take to produce enough ethanol and soy bio-diesel to comply with the federal energy bill. "That's the minimum (number of plants)," Schafer said. "I don't know the maximum." * * *

"It's tough to make bio-fuels work without government help," said Charlie Smith, chief executive officer of Countrymark Co-Op, an Indiana company that produces soy bio-diesel fuel. * * * "If gas goes back to $1 a gallon, ethanol is going to really struggle, and people making investments in ethanol are going to really struggle," Smith said.

Soy bio-diesel makers like Countrymark also would struggle if gas prices drop.

"Soybean oil after it's refined and bleached typically costs $1.75 a gallon," Smith said. "To make it into bio-diesel, you will pay maybe 10 cents a gallon to process it in a facility costing $20 million to $30 million. What comes out is something worth about $1.90 a gallon without government subsidies."

Smith called the alternative fuels boom sweeping the nation a "potentially very great opportunity," but one that has to be pursued carefully because "we're not playing with Monopoly money. We're playing with real money, and if you belong to a co-op, it's your money.

"As a consumer, you'd love it if we build three times as many ethanol plants as we need, because the price of ethanol is going to go really low. But if you are an investor in that ethanol plant, that's bankruptcy."

Posted by Marcia Oddi on September 16, 2005 06:32 AM
Posted to Environment | Indiana economic development