GoodFuels

A Christmas Miracle

Interesting story from AP this week seems to show a miraculous epiphany on the part of the Grocery Manufacturers Association.

The article attempts to answer the question “Now that corn prices have plunged, is the ethanol industry still in the hot seat for driving up prices?” They apparently asked GMA’s Scott Faber for his thoughts.

I think we could call that a Christmas miracle.

Obama Appointments Support Ethanol

The newest appointments by President-elect Obama continue to show support for ethanol.

Today, former Iowa governor Tom Vilsack was announced as Obama’s choice for Secretary of Agriculture and Colorado Sen. Ken Salazar for interior secretary.

Vilsack served two terms as governor of Iowa from from 1998 until 2006 and was a short-lived opponent of Obama’s in the presidential race. As governor, Vilsack was a strong supporter of ethanol and other biofuels as a way to help rural economies. In his brief run for the Democratic presidential nomination last year, Vilsack made the focus of his campaign a plan to end U.S dependence on foreign oil by promoting alternative energy sources.

AgWeb quotes Vilsack from an interview:

“Paying lip service to the need for renewable fuels isn’t real change. unless you’re a lifelong apologist for the oil industry. Providing the incentives, leadership, and backbone to actually build production plants when most people say it can’t be done. That’s real change. But that’s what we did in Iowa, and as a result, not only are we number one in ethanol production, which may not seem like a surprise, but we’re also number one in biodiesel production and number three in wind energy.”

As for Salazar, the interior secretary will play a key role in setting the new administration’s environmental, energy and land-use policies.

Salazar has also has been a strong supporter of biofuels, this year co-sponsoring the Open Fuel Standard Act, legislation would require that half of all new automobiles starting in 2012 be flex-fuel vehicles warranted to operate on gasoline, ethanol, and methanol, or be warranted to operate on biodiesel.

American Farm Bureau Federation says Sen. Salazar is “uniquely qualified and experienced to serve as Secretary of the Interior. He serves on the Energy and Natural Resources Committee and has been a strong proponent of expanding the development of renewable fuels.”

Silver Lining Down the Road

Even the most optimistic among those in the ethanol industry have to admit that it looks a little gloomy right now.

In a roller coaster year that has seen gas and corn prices skyrocket and crash within months, the industry has definitely taken it on the chin. Add in a poor economy and it’s hard to see a bright future at the moment with stocks dropping like rocks, companies filing bankruptcy and plants closing.

That’s the bad news. But CNBC’s By The Numbers points out that this short term pain could create a longer term opportunity for the survivors.

“…as their hedging contracts reset, surviving ethanol producers may be well positioned to rebound back into profitability and growth thanks in part to low prices and the legislation for mandated use of ethanol. A pro-renewable energy Obama administration will add momentum to the existing legislation as well.”

The ethanol industry has survived worse times than this. Those who are in the business because they believe in it will continue to survive to see the sun break through the clouds again.