``This is a major bump in the road,'' says Walker Filbert, president of Heartland Ethanol LLC in Knoxville, Tennessee, which abandoned plans to build seven plants in Illinois.
The particulars in the ethanol market. Corn prices have risen dramatically - 58 percent in the past year, to $5.37 a bushel (one bushel of corn makes about 2.75 gallons of ethanol. That squeezes producer profit not to mention the dramatice impact on food producers who have formed a coalition - Food Before Fuel - that seeks to modify federal ethanol mandates. Currently ethanol plants consume abuot a third of corn output. President Bush and Sen. Obama tend to favor ethanol subsidies while McCain has a record of oppostion. From the article:
Ethanol may account for 20 percent of the gain in the rate of U.S. food inflation, says Ephraim Leibtag, a USDA economist. U.S. food prices may climb 6 percent this year, the most since 1980, the department estimates.
Then there is the capactiy issue. There are currently 168 ethanol plants in operation. Again from the article:
The 168 plants had capacity for 9.96 billion gallons as of Aug. 26, almost 1 billion more than the U.S. requires this year, the Washington trade group Renewable Fuels Association says. Another 43 plants scheduled to be built or expanded would raise capacity to 13.8 billion gallons. Most make ethanol from corn.
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