Today in Biofuels: US gas prices hit record, more on the way; China re-starts ethanol approvals; jatropha starts take-off in US

Top Story:

US gasoline prices rose to a record $3.31 per gallon this week, according to the nationwide Lundberg survey. The survey’s editor said that spring gasoline reformulations would keep prices rising.   Meanwhile, Nigeria, one of the world’s major crude oil exporters, is experiencing a gasoline shortage crisis after 13 ships were quarantined in Lagos because of excessive ethanol content, causing weekend-long fuel queues.
World Opinion:

Moneymorning.com writes that “corn prices will continue to rise….as high as $6 a bushel.…not such a good thing for the American consumer….A recent study from Purdue University puts the added food cost from the renewable mandate at $15 billion in 2007 – about $130 per household. And that was from ethanol usage at a fraction of what will be required in the years ahead.

Kushagra Bajaj, joint managing director of Bajaj Hindusthan, writes: “Is it actually an issue of food versus fuel? Can we not have both food and fuel? And both in plenty? Stanford University biologist Chris Somerville has calculated that with the right plants, just 3.5% of the earth’s surface can supply all of humanity’s energy needs, compared to the 13% now used for agriculture.

Kevin Libin writes in Canada’s Western Standard and a column in the National Post, “With everyone from Germany’s environment minister to the editorial board at The Economist to Fidel Castro challenging the biofuel fad, where are Canadian policy makers on this issue?….“The Government of Canada is committed to biofuels production. Biofuels not only offer new markets for farmers, but new jobs for our cities and towns, and a new source of cleaner renewable energy.”

Jan Brentebraten of European Ford told an Energy Efficiency and Conservation Authority conference that “High-level biofuel blends are being touted as an affordable way of cutting carbon emissions before more complex oil-substitution technologies are widely available. It is very important to focus on what’s available today and not sit and wait for something better to come along…E85 [is] about a third cheaper than petrol-electric hybrids….[agreements on sustainability standards are] “absolutely critical. It is in nobody’s interest to replace one bad option with another.”

Producer News:

In Florida, My Dream Fuel has 1 million jatropha seedlings in the ground in Hendry County, and is planning to open a 150,000 sq ft seed crushing unit to produce jatropha oil for the US market. The company is also promoting its seedling product to farmers, to switch to jatropha production for their marginal lands. Sunshine Biofuels is exploring the establishment of a biodiesel production facility in Collier COunty to process the oil. a start-up company formed two years ago to build an alternative fuel plant.

In Colorado, Blue Sun Biodiesel closed on an unsecured $3 million private loan that the company said would allow it to proceed with 10-terminal development to serve its B20 and B100 clientele. BlueSun said that first quarter 2008 sales were three times the pace set in the corresponding quarter of 2007.

In New Jersey, Universal Valve said that it has developed a new tank filling diffusion system that prevents water phase separation in ethanol blended fuels without adding to tank filling time. Ethanol’s tendency to absorb water causes immense headaches in converting existing petroleum infrastructure to ethanol blends.

International News:

In China, the National Development and Reform Commission has signed off on plans by Hubei, Jiangsu, Jiangxi, Hebei, and Chongqing provinces to develop sweet potatoes, sweet sorghum or cassava ethanol plants. China had previously halted all ethanol production as a result of a food shortage of the country, but is now advancing with non-grain projects.  80 percent of China’s ethanol output has been based on corn.

In Australia, the Productivity Commission has asked the federal government to review ethanol subsidies in light of the potential impact on food prices. The federal government has spent $31.9 million on annual subsidies, and research by the Commonwealth Parliamentary Library found that diverting crops to ethanol production would increase the trade deficit. In 2006, the Rudd government when in opposition demanded that the government lock in the tax-free status of ethanol in order to assure the emerging industry’s survival.

In India, the Society of Indian Automobile Manufacturers is conducting a study to determine how many of India’s 101 million existing vehicles will be able to handle the switch to E10 from E5 planned for October.

Research News:

In Nebraska, University of Nebraska-Lincoln economist Richard Perrin testified that “it’s obvious that [ethanol is] not a very big contributor” to the rise in food prices, saying that grains make up 3 percent of total food costs. Perrin said that 40 percent of the rise in corn prices can be attributed to ethanol, with the rest accounted for by increases in global food demand and price speculation.

Policy and Policymakers:

In Iowa, Senator Charles Grassley has written to auto manufacturers asking for their support of efforts to approve E20, by contributing to research on the imapct of E20 on engine performance. Grassley noted that companies such as Honda are selling E22 cars in the Brazilian market, and could provide critical data on engine performance in support of a move to E20.

Consumer and Fleet News:

In Texas, the 30,000 square foot Willie’s Place is scheduled to open July 3rd as the hub of a fuel and entertainment complex that will include a 27-hole golf complex, a theater, residential area on a 3,000 acre footprint at Carl’s Corner. Willie’s Place will sell E85 and BioWillie, and will be the first facility opened in the planned development.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, jumped 2.95 percent to close at 118.02 led by ADM and VSE.  Archer Daniels Midland (ADM) gained 3.13 percent to close at $42.53, while VeraSun Energy (VSE) led ethanol stocks with a gain of 5.12 percent to close at $8.42.  Among small caps, Green Plains Renewable Energy (GPRE) rose 11.41 percent to $10.25 in the wake of its merger with Great Lakes Cooperative.  Overall, declines led advances 3 to 2.

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