Daily Biofuels Summary for November 2: US consumers want more ethanol; Australian Green party wants less; UN Special Rapporteur on Food wants none

Top Story:

A new survey commissioned by the Renewable Fuels Association showed that 74 percent of Americans believe we should increase our use of domestically produced renewable fuels like ethanol. In addition, 87 percent of Americans maintain the federal government should actively support the development of a renewable fuels industry in this country, and 77 percent think Congress should encourage oil refiners to blend more ethanol into their gasoline products. 77 percent said that the government should provide incentives to encourage refiners to reduce their use of oil and increase use of renewables. 75 percent view ethanol as somewhat important in reducing greenhouse gas emissions, with 41 percent viewing ethanol as extremely important in this respect. 84 percent of Americans believe something other than ethanol is at the root cause of rising food prices. Specifically, higher oil prices (46 percent), increased global demand (15 percent), and adverse weather conditions like drought (14 percent) were deemed to have a greater impact on food prices than ethanol production (7 percent).

Producer News:

In Illinois, Stepan Co. reported a 49 percent fall in earnings, to $3.1 million or 31 cents per share, citing the impact of rising soybean oil prices on the the company’s biodiesel operations. The company manufactures Stepan Biodiesel SB-W.

International News:

In Brazil, the head of Petrobras, the Brazilian state oil company, said the United States should eliminate or reduce the tariff on ethanol imports because US use of corn for ethanol was driving up world food prices.

In Australia, a member of the Green Party in the New South Wales parliament said the Greens support alternative energy but not the alternative energy plant at Casino. He said that the use of 200,000 tonnes of grains was excessive use of a scarce resource.

In South Africa, the Council for Scientific and Industrial Research (CSIR) is expanding its research efforts in the production of algae-based biodiesel. CSIR has invested more than $200,000 in desktop and lab research, which will continue through 2009.

In Canada, Ocean Nutrition Canada is selling biodiesel made from fish oil. 21 million gallons of waste fish oil are produced annually by the Alaskan fishing industry, of which 13 million gallons are dumped into the ocean.

In India, B M Khaitan Group companies Eveready Industries India Ltd (EIIL), McLeod Russel India (MRIL) and McNally Bharat Engineering are reported on tradingmarkets.com to be seeking biofuels acquisitions. EIIL and McLeod Russel vice-chairman Deepak Khaitan said that the group has taken a 50 percent stake in D1 Williamson Magor Biofuels, and that the joint venture would invest $89 million in jatropha plantations and a biodiesel plant, with an eventual ambition of a 55,000 hectare jatropha plantation in eastern India.

Research News:

The Grow Iowa Values Fund, Iowa Highway Research Board, Grain Processing Corp. of Muscatine and Iowa State University’s Office of Biorenewables Programs have jointly funded and resourced a $93,775 project to study the use of lignin, a byproduct of corn ethanol production, in Iowa road construction. Natural Iowa roadbeds are less stable than desired and lignin’s properties as a roadbed binding agent are the subject of the research.

Policy and Policymakers:

Jeff Tschirley, head of the United Nations Food and Agriculture Organization said, “FAO strongly feels that food security and environmental considerations must be fully addressed before making investments or policy decisions, and we are actively working to ensure this happens. However, a moratorium that ignores the potential of biofuels to support rural development and assist the economies of developing countries would not, in our view, be a constructive approach to this topic.” He said that the description of biofuels as a “crime against humanity” by Dr. Jean Ziegler, UN Special Rapporteur on The Right to Food, was regrettable.

The Ethanol industry spent $1.6 million in lobbying during the first half of 2007, compared to the expenditure of more than $18 million by the six largest oil companies. Major ethanol spenders were Archer Daniels Midland Co. ($440,000), the Renewable Fuels Association ($310,000), Poet ($120,000), VeraSun ($60,000), and E3 Biofuels ($80,000). Top spenders among oil companies were BP America ($2.06 million), Chevron ($4.08 million), ConocoPhillips ($2.24 million), Exxon Mobil ($6.44 million), Marathon Oil ($2.01 million) and Shell Oil ($1.56 million).

Consumer and Fleet News:

In Georgia, the first E-85 pump in the Atlanta metro area opened at a Texaco station in Smyrna. The pump is the first of 20 expected to become available for 165,000 flex-fuel car owners in Georgia. A spokesman for the station said that ethanol would be priced at 15 to 20 cents less than regular unleaded gas.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, fell 2.42 percent yesterday to 103.21 amidst a broad market pullback associated with increasing fears of a credit crunch. The Dow Jones average was down 2.6 percent, or 362 points, in yesterday’s trading. Losers led gainers more than 3 to 1. Among diversified agribusiness, Archer-Daniels-Midland (ADM) was down 2.18 percent to $35.00, and The Andersons (ANDE) was down 6.26 percent to $46.54. Among mid cap pure-play ethanol stocks, Aventine Renewables (AVR) was up 2.10 percent to $10.71 on favorable response to increased capacity, while Pacific Ethanol (PEIX) fell 6.48 percent to $7.51. Among small caps, BioSolutions Manufacturing (BSLM.OB) was up 4.55 percent to $0.115 while Texcom (TEXC.PK) fell 14.29 percent to $0.09.

Biofuels Digest published a short guide to navigating troubled waters in biofuels investing, in an article titled: 8 Ways to Understand the Biofuels Investment Rollercoaster.

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