Ethanol Plants Shutting Down In US  

EcoGeek reports that rising grain prices (and rising floodwaters) have caused the demise of a number of ethanol plants in the US - Ethanol Plants Taking Big Hits, Shutting Down. This won't help fuel prices of course, though it might take some pressure off food prices.

Ethanol plants based on food crops are taking a serious hit because of the price hike for grains and the flooding in the Mid-west that has wiped out a significant number of crops. In just the most recent news, Heartland Ethanol is tossing plans to build seven corn ethanol plants in Illinois, and even worse, they’re dissolving the company – all due to feedstock prices. VeraSun Energy is delaying construction at two of their plants because of the flooding.

With corn passing $8 a bushel and a 10% drop in production over the last year, it seems that corn ethanol is finally reaching the end of its popularity (of what little it had left) and corn ethanol plants are either already in, or nearing the red without the prospect of getting funding thanks to the credit crunch.

Corn ethanol is likely just the first of many crop-based ethanols to take an immediate dive, despite the best efforts of biofuel companies. Ethanol stocks are getting downgraded since Citi analysists are predicting more large-scale shut-downs as small and midsize producers will be forced to shut down due to the price issues, representing a loss of between 2-5 billion gallons of ethanol per year. Citigroup analyst David Driscoll is predicting that about 76% of ethanol plants are at risk of shutting down in the next few months. Earth2Tech has counted 11 plants whose operations are suspended just since May (see the above map). Feels a little bit like a rapid downward spiral, doesn't it?