"But the biggest political issue facing the industry right now is pressure by ethanol critics, especially livestock producers, to reduce the federal government's mandate on how much ethanol must be purchased by gasoline refiners. Proponents say refiners can use past spending splurges on ethanol as credits against this year's purchasing requirements, and exports will also probably be cut. This should leave more corn for everyone else." Todd Becker says (President and CEO of GPRE)
Refiners will still keep buying a lot of ethanol as needed. Why? Many have come to depend on the corn-based fuel's high octane level of 113 to raise overall gasoline octane to 87 and higher.
"What we've seen over the last 18 months is that the refining community has kind of scaled back to an 84 octane subgrade gasoline — which you can't put in your car — because they saw the benefit and the opportunity that they can use ethanol as their blend stock," Becker said. "If you want to replace this octane, you're going to have to buy something much more expensive than ethanol today, and it's not in big supply."
If that's the case, then the fight will be on in earnest between all the users of corn this fall, assuming the worst about the drought. Yet the octane issue shows how the ethanol industry has tried to expand its value proposition in the nation's fuel supply. That's a change from four years ago, when many declared the death of ethanol as corn topped $7 and several producers went bankrupt. Like a zombie, ethanol won't die.
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