75% Biodiesel/21% Ethanol Capacity Idle. USDA pushing EPA for more ethanol in gasoline

In what would be welcome relief to the long suffering Ethanol Industry, the USDA is pushing the EPA to raise the ethanol content of gasoline above the present 10%.

The SkunK recommends raising the rate to 12% this year, 15% next year and to 20% in two years, the SkunK believes this would have a tremendous positive impact on the ethanol industry and the entire Midwest economy. Now I sit and wait for them to ask me.
http://uk.reuters.com/article/oilRpt/idUKN1029043720090210?pageNumber=1&virtualBrandChannel=0
*******
You do not have to look far for proof of a suffering Biofuels Industry:
Seventy-Five percent (75%) of Biodiesel capacity sits idle as biodiesel plants close:
http://www.biodieselinvesting.com/biodiesel-archives/2009/01/22/with-u-s-biodiesel-capacity-only-at-25-percent-low-demand-for-oil-forces-northwood-mills-shutdown/
Some 21 percent of U.S. ethanol capacity has been idled since peaking sometime last year, according to Archer Daniels Midland. After filing for bankruptcy protection in October, VeraSun Energy Corp. has shut 12 out of 16 ethanol plants. The company, which used to be the second largest U.S. producer of the fuel, suffered from costly hedging bets on the price of corn and the credit crunch.

Since then a string of plants have filed for bankruptcy protection, including a subsidiary of Panda Ethanol Inc., Northeast Biofuels and, last week, the private Wisconsin distiller Renew Energy LLC. (sister plant to Utica, 1st COES - the utica plant is unaffected.)
http://money.cnn.com/2009/02/03/news/companies/adm_ethanol.reut/index.htm

Also, less than a month after SkunK reported Fulton NY Ethanol Plant filed chapter 11 - it sells its unprocessed 800,000 bushels of perishable corn on hand for $2.6 million. This is the location of our 6th and 7th COES in our planned deployment.
http://www.biodieselinvesting.com/biodiesel-archives/2009/02/18/bankrupt-northeast-biofuels-unloads-26-million-worth-of-unused-corn/
and
http://www.9wsyr.com/news/local/story/Volney-ethanol-plant-sells-off-all-its-corn/G5uygql20k-M177wFRhSiA.cspx
*********
Otter Tail Ethanol (Greenshift COES with a 30 November planned completion?) says in their current newsletter that they are going to their membership trying to raise additional monies to continue operations through this bad spell. If it was a public company it might be called "dilution", since they are selling additional pieces of the same sized pie. In LLC land: "The equity offering provides current members a unique opportunity to leverage their original investment, . . ." Wish them the best of luck.
http://www.ottertailethanol.com/documents/09-02-01InformationRelease.pdf
*******
Thanks to Peanut 93 for his RB link with the ominous title:
Is Alternative Energy Dead?
(SkunK says NO! But this medicine hurts too!)
http://seekingalpha.com/article/121458-is-alternative-energy-dead?source=yahoo

In fact a recent article dated 13 Feb it says that

"U.S. weekly ethanol margins rise to above break even"

in fact 5 cents a gallon in profit is what average producers can now expect. http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE51C6DT20090213

SkunK Conclusion. I think we are near the bottom of the biofuels market. With mandates increasing, margins should continue to improve. An increase in ethanol mandate from 10 to 12 or 15% at the pump would really spike demand.

In the meantime the Biofuels industry is struggling to stay alive. Greenshift is no exception. This is not just a wash out of weak hands - that happened months ago. This is now a test of good and great companies. The SkunK reported how soy diesel plants lost their margins. Then biodiesel plants fell like snowflakes. Seventy-five percent of biodiesel plant capacity is idle. Twenty -one percent of Ethanol production is idled. The VeraSun giant proved that it takes more than just credit lines and production to stay alive.

Those companies that can weather this storm will be left with an expanding market share in an expanding biofuels market. Whether our little under capitalized Greenshift makes it or not at this point, is (and always has been) open to honest debate. The SkunK has his opinion and I am sure so does everyone else. The fact that it still here at all, however, turns to rubbish all the arguments I have read over the past twelve months that Greenshift is some kind of make believe company without real assets - ready to collapse at any second. Well, a lot of seconds have ticked by in the last 4 quarters and a whole lot of good companies have already gone under.

Whatever happens now, will happen to a company that has outlasted many. The recent Adrian newspaper article has NextDiesel stopping production soon and construction liens on the Riga COES. It has no news on the GE CBE or other financing deals. Since this and other industries are suffering nationwide, few of those not working at NextDiesel will find quick reemployment in their field. I would expect a larger than normal percentage will be available for reemployment when the economics can justify it.

With 75% of biodiesel capacity nationwide idled - we could not be making money hand over fist if we just did something "different". To use an ol'bubba phrase, "It's the Economy Stu......!"

I tell ya, this job as a blogger for a penny stock, is like being the umpire for a little league game, without all the perks. Heck, I don't even get a uniform . . .

SkunK