Ethanol sales slump in US ethanol heartland

02 November 2009 21:48  [Source: ICIS news]

Sales down in IowaHOUSTON (ICIS news)--Ethanol sales in Iowa are on track to be lower in 2009 than they were in 2008, a troubling trend for a state that is considered the heart of the US ethanol industry, sources said on Monday.

The Iowa Renewable Fuels Association (IRFA) said for the first nine months of the year, ethanol accounted for 7.3% of all fuel sold at gasoline pumps in the midwestern, corn-producing state. That was down from 7.5% in all of 2008. September ethanol sales represented 7.1% of the fuel sold at gas stands.

IRFA spokesman Monte Shaw said there were no obvious reasons for the decline, calling it “puzzling".

"In 2006, Iowa was one of the nation’s leaders in ethanol sales," Shaw said. "Today, Iowa does not lead. Iowa is not average.  Iowa is below average."

Shaw said no plan was in place to reverse the trend, but added that the IRFA would work with state lawmakers to discuss their options.

“These disappointing statistics should force a complete reexamination of how Iowa intends to move forward to be a leader in the use of ethanol, not just the production,” Shaw said.

Iowa has 40 ethanol refineries with an aggregate production potential of nearly 3.3bn gal/year, about a quarter of total US capacity, according to statistics from the IRFA and the national Renewable Fuels Association (RFA). 

Ethanol refiners in the state also said they could not figure out what led to the statewide decline.

“Prices are favorable for blending. The margins are favorable for the plants to run. Just for me, looking at it, it doesn’t make much logical sense,”said Mark Heckman, commodity manager at the Big River Resources refinery in West Burlington, Iowa.

In contrast with Iowa’s general sales stumble, overall US ethanol demand has grown throughout 2009. Average monthly ethanol sales for the first seven months of 2009 were 862m gal, up from 747m gal in the preceding year, according to the RFA statistics.

The rise in national ethanol consumption in the US comes despite the recession causing year-on-year gasoline sales to fall 12% for the first seven months of 2009.

Instead, Iowa’s problem could lie with its insistence on tax credits to promote the biofuel instead of mandates requiring its use, RFA spokesman Matt Hartwig said.

“I don’t see this as a national trend,” Hartwig said. “You cannot extrapolate the Iowa experience to the rest of the country, as we continue to see ethanol use increase.”  

Doris de Guzman examines alternative processing, new technology, R&D and other sustainability initiatives in Green Chemistry
For more information on ethanol, visit ICIS chemical intelligence
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