Fuel Ethanol Margins: 2009 Update
(Cattlenetwork.com) The November 26, 2008, edition of This Week In Petroleum looked at profit margins for the dry mill fuel ethanol industry, pointing out the boom-and-bust cycles that had occurred. In 2009, ethanol producers’ margins continued to fluctuate… The price (revenue) component of ethanol margins is influenced by the underlying ethanol supply-demand balance and by the price of gasoline, since nearly all fuel ethanol is blended with gasoline at up to 10 percent volume. When ethanol supply capacity is closely balanced with ethanol demand, the ethanol price to blenders after accounting for the tax credit typically follows the price of gasoline. However, when ethanol supply capacity is much greater than demand, the price of ethanol tends to drop below the gasoline price and settle closer to its variable production cost. This has been the situation in the ethanol market for much of the time since late 2007 when prices dropped in the wake of capacity expansions that were pushing ethanol supply capacity well past demand… READ MORE
Related posts:
- Speech by Philip New, CEO, BP Biofuels at F.O. Lichts World Ethanol 2009 Conference, Paris, 3 November 2009
- Advanced Biofuel Capacity Expected to Increase from 6.88 Mgy in 2009 to 640.18 Mgy in 2012
- Fuel Requirements for Diesel Fuel Injection Systems Diesel Fuel Injection Equipment Manufacturers Common Position Statement 2009
- Groups Want More Tests on Higher-Ethanol U.S. Fuel
- Petrobras CEO Highlights Performance in 2009
