Tuesday, February 10, 2009
RAVA: Maybe you think we're in cahoots.
ELAINE: No, no.. but it is quite a coincidence.
RAVA: Yes, that's all, a coincidence!
ELAINE: A big coincidence.
RAVA: Not a big coincidence. A coincidence!
ELAINE: No, that's a big coincidence.
RAVA: That's what a coincidence is! There are no small coincidences and big coincidences!
ELAINE: No, there are degrees of coincidences.
RAVA: No, there are only coincidences! ..Ask anyone! (Enraged, she asks everone in the elevator) Are there big coincidences and small coincidences, or just coincidences? (Silent) ..Well?! Well?!..]
Feb. 6 (Bloomberg) -- The Agriculture Department is in discussions with the Environmental Protection Agency about raising the amount of ethanol blended into the U.S. gasoline supply, U.S. Agriculture Secretary Tom Vilsack said.
About 21 percent of the U.S. capacity for ethanol production is idle, according to ethanol-maker Archer Daniels Midland Co. VeraSun Energy Corp., the second-largest U.S. ethanol maker, filed for Chapter 11 bankruptcy protection in October as an industrywide expansion of production facilities outpaced demand.
“I do think it’s important for us to look for strategies to make sure the infrastructure of the ethanol industry is preserved, because it is a key component to this new energy future the president’s laid out,” Vilsack, a former Democratic governor of Iowa, said today in an interview with Bloomberg News in Washington.
Ethanol demand has fallen as gasoline use dropped since last summer. By increasing the blend, demand for ethanol will be boosted even as gasoline use falls. The U.S. recession exacerbated an ethanol supply glut as demand for transportation fuels dropped.
Ethanol futures prices in Chicago touched a five-week low this week. Denatured ethanol for March delivery rose 4.5 cents, or 2.9 percent, yesterday to $1.597 a gallon on the Chicago Board of Trade. Futures have fallen 23 percent in the past year.
“We have been talking to folks at EPA, as they look at the blend-rate issue,” Vilsack said. “That may be one way in the short term to create new opportunities.”
The EPA in November said it would require gasoline to contain a 10.2 percent blend of biofuels this year.
Vilsack said the discussions so far haven’t included “specific numbers. We’ve just begun the conversation.”
“This is a very high priority for the ethanol industry so it would be a welcome development if they could secure a higher blend rate,” Mark McMinimy, an analyst with Stanford Group Co. in Washington, said in a telephone interview.
“I’m not sure how much difference it could make to profits margins in the short term,” he said.
Ethanol producers have faced declining margins from a competitive market, coupled with low oil prices and relatively high prices for corn, used to make ethanol, said McMinimy.
“That dynamic has to be changed,” he said.
Gasoline futures prices have dropped 43 percent in the last year on the New York Mercantile Exchange. Gasoline demand during the past four weeks was 2.4 percent below the same period last year.
Poet LLC, the largest ethanol producer, said yesterday it may buy shuttered distilleries owned by VeraSun.
Vilsack also dismissed the idea of changing the congressionally mandated renewable fuels standard, which requires 11.1 billion gallons of biofuels such as ethanol to be used in the U.S. this year.
“I don’t think we should be changing anything until we absolutely have to,” Vilsack. “We’ve laid the markers down there and I think we have to work hard to meet it.”
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