US ethanol production capacity to increase to 13.3 billion gallons in 2008

U.S. ethanol production capacity reached 7.5 billion gallons by the end of 2007, a 40 percent increase over 2006. National production capacity will increase to 13.3 billion gallons at 136 facilities in 2008 based on the completion of all existing projects.

A new study by the International Food Policy Research Institute, “The World Food Situation: New Driving Forces and Required Actions” said that, based on existing and announced biofuel plant capacity, corn prices would increase by 26 percent and oil seed prices would rise by 18 percent by 2009.

In a second scenario, based on doubling planned capacity, corn prices would increase by 72 percent and oil seeds by 44 percent. The Institute said that either scenario would result in less food availability and calorie intake globally, with the most acute effects felt in in Sub-Saharan Africa.

A recent study by the Bureau of Labor Statistics showed that the price increase for milk, cheese, meat, ice cream, eggs and malt beverages in April 2006 with April 2007 was 3.0 percent, vs a 25-year annual inflation rate of 3.0 percent.

A biannual IMF report on the world economy said that “The use of food as a source of fuel may have serious implications for the demand for food if the expansion of biofuels continues. One country’s policy to promote biofuels while protecting its farmers could increase another (likely poorer) country’s import bills for food and pose additional risks to inflation or growth.”

The report said that greater international cooperation on biofuel production was needed, and that eliminating barriers on biofuel imports in the US and the European Union would alleviate pressure on the cost of food.

Recently, the chief economist of CIBC World Markets, criticizing the US drive to increase ethanol production, said that “the only thing Bush’s renewable energy policy will fuel is inflation”.

Jeff Rubin linked expansion of ethanol to a 60 percent increase in corn prices, and said food inflation would top 5 percent in 2008 and approach 7 percent in 2009. He said that soaring corn prices passed directly into animal feed costs and tortillas, but are also causing increases in the costs of other grains as corn production replaces other types of production.

Free Subscription to the Daily Biofuels Digest e-newsletter

Related Stories

Corn expert predicts 100% increase in biofuel demand for US corn by 2009 as corn acreage falls

An industry researcher speaking at the International Corn Industry Conference in Dalian, China, projected US ethanol production capacity will increase from 6.7 billion gallons today to 20.43 billion g...

Purdue researcher says US will consume 12 billion gallons of ethanol, produce 13 billion in 2008; return of ethanol glut looms

A Purdue researcher said that the US will produce ethanol at 13 billion gallons a year in 2008, but that the US distribution system could only handle 12 billion gallons, which will cause a fall in pri...

Growth Energy trade groups says 136,000 jobs, $24 billion will result from switch to E15

In Washington, ethanol trade group Growth Energy said that 136,000 jobs would be created along with a $24 billion increase in economic activity if E15 blending is allowed by the EPA, increasing the ma...

POET to increase production capacity by 25 percent in 2008, to 1.5 billion gallons per year; will add cellulosic ethanol capacity at “most” of its 22 plants

The CEO of POET said that the company will increase production capacity to at least 1.5 billion gallons in 2008 through new plant construction. Speaking at the Reuters Global Agriculture and Biofuels ...

Purdue study projects 4.5 billion in added US ethanol capacity in 1st half of 2008, and fast-rising corn prices

A report from Purdue University projected corn prices in the mid-to-high $4 range for 2008-09, and an addition of 4.5 billion gallons in ethanol capacity in the United States. The combination of circu...

US ethanol capacity shrinks 5 percent in 3 months, to 10.6 Bgy

In New York, Reuters is reporting that total US ethanol production capacity has fallen five percent to 10.6 billion gallons since the beginning of the financial crisis in September, while the number o...