Posted by paul on April 14, 2009 at 05:59:57 from (66.60.197.35):
In Reply to: OT Ethanol Plants posted by NEsota on April 13, 2009 at 18:52:20:
It was good news, I think, that an oil company bought was it 7 of those ethanol plants? While I don't like big oil controling things, if they are involved in ethanol, some of their opposition & bad (wrong) press about it will go away.
I agree some of the later ethanol plants that were built were based on bad ecconomic goals & just jumping in at any cost.
Many of the older ethanol plants in Minnesota, esp those farmer-owned coops, were built with sound financial goals & costs, and are still prospering, even in this ecconomy.
The Verasun mess was created by a merger of 2 ethanol companies - which over extended Verasun a little bit; and then their corn buyer people got real stupid and tried to buy corn at it's highest point, with no proper hedging & off-setting of those extreme costs. They didn't have enough cash left after the buyout of Bioenergy to do the hedging, and so they became pure speculators in the grains market. _Not_ a good thing at all, and has nothing to do with ethanol production - they failed because they did poor buying of corn and did not follow sound business practices. The ethanol plants in this area should work ecconomically, and continue to do so, and should not be sitting empty. The math works out if one is doing sound business 'here'.
The sooner those remaining ethanol plants get sold to someone & up and running, the better for all of us. They are built in good locations, with cheap corn & plenty of it available. As well there is a lot of livestock to use up the corn mash feed the ethanol plants produce. They need to get up & running again. The ecconomics of ethanol works well in Minnesota and surrounding states, as corn is so cheap & plentiful here. A well built, well financed, cheaper designed ethanol plant 'here' is a good thing and should work unless management gets stupid.
There were some ethanol plants built in strange locations, like Texas or New York, where corn is in short supply & sells for a premium price. They were built by business people who threw gobs of money at the idea because they liked the idea.... Those few facilities are pretty questionable in my mind, and I would not be surprised if they fail sometime in the future, and end up sitting empty.
A brand new plant is about to go online in May not real far from me. They have been building all winter, sounds like everything is looking good for them. They did not book their corn early, they plan to buy from locals on the spot market at least for this year. A good win-win for everyone, and seems to be prudent business practices for the current ecconomy.
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