Ethanol prices, supporters react to Klobuchar-Thune-Feinstein compromise

July 11, 2011 |

In Washington, reaction continued to roll in to the negotiated Klobuchar-Thune-Feinstein compromise on the ethanol tax credit, which the Digest reported on Friday in Part I of our series, “The reality we are living in now: Biofuels and the new DC.

The California Ethanol Vehicle Coalition came out swinging: “If you were trying to stifle biofuel technology, increase reliance on imported oil and ethanol, eliminate jobs, and increase pollution, you could not have done a better job than this,” said Joe Irvin, CEVC Executive Director. “Senator Feinstein continues to talk about saving taxpayers money when she just pushed through this $1.1 Billion increase in the federal fuel tax to California consumers by raising the tax on ethanol blends from 13.6 cents to 18.1 cents.  We knew Congress was responsive to the oil industry’s needs but even this surprises us — all of the petroleum industry’s subsidies remain intact.

At the same time, ethanol futures were up 8.6 cents, or 3.3, percent, to $2.707 for the August contract as ethanol blenders are expected to stockpile supplies and blend ahead of the proposed end to the ethanol credit.

The futures contract for January 2012, by which the VEETC is almost universally believed to expire, is at $2.351 per gallon as of Friday, while the September contract is at $2.587, suggesting that traders are betting heavily on an expiration of the credit by the end of the summer.

In New York the current price for ethanol rose to $2.86 per gallon, up 5 cents, according to Bloomberg.

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