Tag Archives: fuel prices

Rocketing Oil prices drive US made Ethanol skyward

March 09, 2011   Karl   No comments

Rocketing Oil price drive US made Ethanol skyward

Corn-based ethanol is the renewable fuel environmentalists love to hate. But as turmoil in the Middle East and North Africa has sent oil prices soaring, U.S.-made ethanol is making a comeback.

Plants mothballed during the economic downturn are reopening. Domestic ethanol production hit record levels last year, topping 13.2 billion gallons, according to the Renewable Fuels Association in Washington. Oil companies that snapped up facilities when the industry hit a rough patch a few years ago – including Valero Energy Corp., Sunoco Inc. and Marathon Oil Corp. – are looking to expand.

In Stockton, Calif., a once-shuttered factory is now thundering to life. Train cars laden with Midwestern corn arrive daily to feed the grinding mills and steaming pipes that distill the grain into the gasoline substitute. The surrounding air is pungent with the smell of yeast.

For the plant’s owner, Pacific Ethanol Inc., which weathered bankruptcy and is slowly reviving three of its plants, it’s a whiff of vindication.

“Ethanol is an important part of the country’s energy picture these days,” said Neil Koehler, chief executive of the Sacramento, Calif., firm.

That’s largely because of Uncle Sam. Concerned about U.S. reliance on foreign oil, federal lawmakers mandated that the nation quadruple its use of biofuels from 2008 levels, to 36 billion gallons annually by 2022. Corn-based ethanol is assured a 15 billion-gallon share of that market. Plus, it’s heavily subsidized. The federal government gives producers a tax credit of 45 cents a gallon. A number of states provide subsidies as well.

The liquid is blended into almost every gallon of unleaded gasoline sold in the U.S and accounts for about 10 percent of the fuel that motorists pump into their cars. That percentage is set to rise; the U.S. Environmental Protection Agency recently approved the use of blends of up to 15 percent ethanol for newer vehicles.

That’s good news for the ethanol industry with oil now topping $100 a barrel and motorists experiencing sticker shock at the pump.

But whether corn ethanol is good for the planet, U.S. taxpayers, the global food supply – or even an automobile’s engine – is a matter of intense debate.

Some scientists have concluded that growing corn, harvesting and distilling it, and trucking it to refineries causes as much environmental damage as burning oil. Many environmentalists want taxpayer subsidies devoted to developing next-generation biofuels – rather than supporting huge agribusinesses and the oil companies now operating ethanol plants.

Budget hawks also want to end ethanol subsidies, with the U.S. budget deficit is ballooning. About 35 percent of the U.S. corn crop will be devoted to ethanol this year, a figure that makes some agricultural and global food policy analysts uneasy.

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Palm oil prices following crude oil’s upward trend as Middle East Unrest continues

March 01, 2011   Karl   No comments

Palm oil prices following crude oil's upward trend

Palm oil prices following crude oil's upward trend

Palm oil climbed the most in a month as soybeans and crude oil advanced on speculation that the turmoil that has cut Libya’s crude production may disrupt more Middle East supplies.

The May-delivery contract rose 2.1 percent to 3,546 ringgit ($1,169) a metric ton on the Malaysia Derivatives Exchange, the biggest gain since Feb. 2. Futures fell 8.9 percent in February, the first monthly decline since June.

Palm oil futures gained 35 percent in the past year as adverse weather hurt oilseed crops in the main growing regions, tightening vegetable oil supplies. Crude oil climbed as much as 0.6 percent as authorities in Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, arrested opposition leaders to derail protests scheduled today.

“The protest wind in the Middle East is very strong and that brings uncertainty to the markets,” Donny Khor, senior vice president for futures & options at OSK Investment Bank Bhd., said by phone from Kuala Lumpur.

Fighting in Libya has shut as much as 1 million barrels a day of oil output, according to Barclays Capital, which said in a note yesterday that the country “remains out of the market.”

Malaysia’s palm-oil exports fell 10.4 percent in February to 1,110,672 tons from a month ago, independent market surveyor Intertek said yesterday. Shipments slumped 9.1 percent in the same period, rival Societe Generale de Surveillance said.

Still, demand for food is growing, Malaysian Plantation Industries and Commodities Minister Bernard Dompok said on Feb. 25. The Food & Agriculture Organization’s World Food Price Index gained to an all-time high in January.

‘Overdone’

Palm oil gained as “traders deemed the recent fall in Malaysian CPO prices as overdone, especially as the gap between soyoil and CPO also narrowed after” soybean oil rose in Chicago, Anand James, an analyst at brokerage Geojit Comtrade Ltd., said in an e-mail today. Soybean oil’s premium over palm oil narrowed to $102.72 a ton at 6:30 p.m. Singapore time after widening to $124.62 yesterday, the highest level since November.

Soybeans for May delivery advanced as much as 0.5 percent to $13.715 bushel and were at $13.7025 at 6:14 p.m. The oilseed rallied 42 percent in the past year. Soybean oil climbed as much as 0.7 percent to 57.72 cents per pound.

Palm and soybean oils are substitutes in food and biofuel uses, and prices can be influenced by shifts in energy costs. As crude oil prices gain, the attractiveness of biofuels made from farm commodities increases.

September-delivery palm oil on the Dalian Commodity Exchange fell 0.3 percent to close at 9,428 yuan ($1,435) a ton. Soybean oil for delivery in the same month closed little changed at 10,200 yuan. CME Group Inc.’s most-active June palm- oil contract, pegged to the Malaysian benchmark price, gained 1.2 percent to $1,155 a ton at 5:16 p.m. Singapore time.

 

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Australia floods mean shortages of Ethanol and higher fuel prices

January 11, 2011   Karl   No comments
australia-floods

Floods in Australia could cause higher fuel prices

Motorists should brace for shortages of ethanol and higher prices for the fuel at the bowser brought on by the Queensland floods, the competition regulator has warned.

The floods which have devastated parts of Queensland and shut a key ethanol processing plant, will probably trigger a shortage in domestic supply, the Australian Competition and Consumer Commission said today.

“The supply shortages may lead to reduced availability of ethanol blended fuels (such as E10) across Australia and mean that motorists may find that fuel pumps which carry ethanol blended fuel are closed or out of order,” said ACCC commissioner Joe Dimasi.

The Royal Automotive Club of Queensland confirmed ethanol production had halted in Queensland after days of rain flooded sugar cane fields and closed of the Dalby Bio-Refinery in a development likely to cut availability of the ethanol and drive up its price.

“The price of E10 will rise,” said RACQ executive manager of public policy Michael Roth. “(But) the more widespread outcome will be shortages of E10,” he said.

A litre of E10 in Brisbane currently costs 126.1 cents a litre, according to petrol price tracking service MotorMouth. Melbourne E10 costs 125.2 cents a litre, while in Sydney it costs 129.9 cents.

Mr Roth could not speculate on the total impact on the fuel’s prices but noted that ethanol comprises only 10 per cent of E10.

Any ethanol shortage could worsen if Brisbane was hit by the floods, he said.

“The major Brisbane refineries may not be able to operate in the upcoming days if Brisbane gets flooded,” he said. “So there might be a wider fuel shortage, certainly in Queensland but that would also impact fuel prices a little bit down south.”

In any case, Mr Roth expected ethanol production in Queensland to be very low for some time. The lower stocks of E10 could force consumers to switch back to regular unleaded petrol in the interim.

The reduced production volumes anticipated for ethanol prompted the ACCC to warn petrol retailers to meet their obligations under the Competition and Consumer Act 2010 to be clear about pricing with customers.

The ACCC encourages retailers to be clear in their signage and labelling at their service stations, including on price boards and at the pump, regarding the availability, or lack of, ethanol blended petrol,” said Mr Dimasi.

Even without the Queensland floods, Australia faces a potential ethanol shortage in the coming years because of rising demand spurred by state government mandates and investment uncertainty in the biofuel following the global financial crisis.

The NRMA was not available to comment on the expected ethanol shortage while the floods continue, it said.

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Biofuels Can Ease the Impact of Hazardous Oil Prices

January 08, 2011   Karl   No comments
Biofuel production begins to have impact on Angolan econom

Biofuels Can Ease the Impact of Hazardous Oil Prices

This week the International Energy Agency (IEA) issued a wakeup call to the world that high oil prices pose a threat to the stability of an already fragile recovering global economy. The IEA went on to recommend that oil-consuming countries boost efforts to cut back on oil usage.

“These sky-rocketing crude oil prices are already having an impact on other commodity prices and food inflation,” said Bliss Baker, spokesperson for the Global Renewable Fuels Alliance. “The IEA’s warnings should be a wakeup call to all countries to reduce our crippling reliance on crude oil. The European Union’s oil imports alone grew by $70 billion last year,” added Mr. Baker.

The UN Food and Agricultural Organization (FAO) also announced this week that the Food Price Index has surpassed 2008 levels driven in large part by the increase in world energy prices.

A report by the United Kingdom’s Department of Environment, Food and Rural Affairs in 2008 concluded that crude oil prices were a major factor behind the food price spikes. The report said, “the rapid increase in global energy prices increased the cost of agricultural inputs, especially fertilizers, so increasing the cost-base of agricultural producers, particularly in the cereals and oilseeds sector.”

“The GRFA issued its own warning with regards to rising oil prices and its effect on food in September 2010. This latest IEA warning and FAO report should encourage us all to reduce our reliance on oil,” said Bliss Baker, GRFA Spokesperson. “These food price spikes will continue unless we make concerted efforts to develop alternatives to crude oil like ethanol and biodiesel,” added Baker.

In 2008, biofuels were blamed for commodity price spikes and resulting food riots. These allegations have since been proven wrong in a number of significant reports published by the World Bank, the United Kingdom’s Department of Environment, Food and Rural Affairs and the United States Congressional Budget Office. A September 2010 report by the UN FAO has suggested that, “increased demand for biofuels will help revitalize the worldwide agricultural sector without putting our secure food supply in jeopardy.”

“The GRFA has long advocated that biofuels are the best way to reduce our reliance on conventional oil. Even OPEC said in a recent forecast that ‘energy efficiency policies along with the use of biofuel will put downward pressure on oil consumption worldwide’. As we have seen today from the IEA warnings and the UN FAO report, we are increasingly vulnerable to soaring crude oil prices,” said Baker.

The Global Renewable Fuels Alliance is a non-profit organization dedicated to promoting biofuel friendly policies internationally. Alliance members represent over 65% of the global biofuels production from 44 countries. Through the development of new technologies and best practices, the Alliance members are committed to producing renewable fuels with the smallest possible footprint.

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