More Ethanol Plants Idle As Demand For Gasoline Slumps

Apr 7, 2020

One of the country’s largest ethanol producers has idled three plants and postponed the opening of a fourth. 

POET posted a statement on its website saying bioprocessing at the locations in Chancellor, South Dakota and in Coon Rapids and Ashton, Iowa has stopped. Another plant in Shelbyville, Indiana was on track to open this spring but that is now on hold.

“Across the board, biofuel producers and our partners in the farm community face an unprecedented challenge,” said POET Founder and CEO Jeff Broin in the statement. “From day one of this crisis, we have placed the highest priority on protecting the health and welfare of our workers, partners and farm suppliers. At the same time, we are working hard to ensure that every biorefinery remains well-positioned to support a strong and swift recovery once daily life returns to normal.”

With stay-at-home orders and mandatory work-from-home plans rolling out across the country over the past several weeks, Americans are driving a lot less and that means buying much less gasoline, most of which contains 10 percent ethanol. 

Emily Skor, the CEO of Growth Energy, a biofuels industry group, says from the start of this year ethanol processors were not in a good position to weather the crisis.

“Our industry came into coronavirus already suffering a series of blows,” Skor says, “everything from foreign nations flooding the market with crude oil to bleeding cash because we’ve got regulatory uncertainties. Small refinery exemptions, trade wars and so forth. So we came into coronavirus already very strained as an industry.”

She’s hopeful some of the $2 trillion federal pandemic relief package will help. 

“That’s something we’re still trying to sort through and figure out,” she says. “First of all, we have to identify all the potential avenues of relief or assistance for the ethanol sector, for the American farmer and for the rural economy.”

Skor says many ethanol plants may be eligible for Small Business Administration support. Other help could come through monies designated for the U.S. Department of Agriculture. She says industry representatives are exploring the options. 

“I can just say that it is absolutely mission critical that we get some assistance to the ethanol industry because they’re in dire straits right now.”

In a phone call with agriculture reporters, Sen. Chuck Grassley, R-Iowa, indicated he also is looking at ways the federal government can help shore up the ethanol industry. 

“The Department of Energy has announced that that department is buying oil for what we call the strategic petroleum reserve, and there ought to be parity for all liquid fuels,” he said. “So I look forward to working with (Agriculture) Secretary (Sonny) Perdue to make sure that our biofuels industry gets through this crisis so that we can continue to use America’s (home) grown energy in our gas tanks.” 

POET estimates the changes will mean it doesn’t need 110 million bushels of corn it would have bought. Farmers will feel that and other disruptions in both the market price for corn and the demand for them to deliver stored grain. 

Skor says any ethanol plant still operating is doing so at a loss. She adds that some have converted a small amount of ethanol into the hand sanitizer market. 

“We are very pleased and proud to participate in some of the public health response specific to hand sanitizer,” she says. “But in no way should a policymaker or consumer think that that makes up for the economic duress that we are experiencing because fuel demand has plummeted.” 

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