"So many ethanol plants are in trouble that they're just jumping over each other to move some product," said Jim Damask, manager at Biofuelsconnect. The alternative-energy brokering company in Heathrow, Fla. explained in Detroit News that oil companies are curtailing their gasoline/ethanol blends, which have been as high as E10 (90-percent petroleum, 10-percent ethanol), due to rock-bottom prices for the alternative fuel.
Ethanol is blended with gasoline to both meet federal mandates and reserve supplies of gasoline. But ethanol contains less energy-per-volume than gasoline, lowering power and economy. And gasoline companies, on the heels of record-high prices which killed demand and profit for big oil, are trying to move as much of their own product as possible. Not to mention that reduced profit margins dictated by low oil prices make blends unappealing to oil companies at present.
2009 Chevrolet HHR E85Enlarge Photo
Due to the slack demand for ethanol, U.S. producers have halted 2.05 billion gallons of annual ethanol capacity, working out to 20 percent of total production in this country. Just like many automakers, they've employed plant shutdowns or delays in new plant construction to get supply in line with demand.
[source: Detroit News]