In today's slower economy, drivers are using less fuel and the ethanol industry is faced with excess capacity. Oil and gasoline prices have plummeted since last summer while corn prices have remained relatively high. Blending ethanol into fuel is no longer the smart economic choice it was months ago, and refiners are only buying enough to meet federal blending mandates, which is a level far below industry capacity. Energy experts predict that gasoline usage in 2009 and 2010 may be 6% or more below 2007 consumption levels. At current ethanol blending requirements, there would be no need for increased ethanol production.
One of the largest producers of ethanol halted production at 75% of its plants. Three ethanol producers have declared bankruptcy. The president of the Renewable Fuels Association estimates that 24 plants out of the nations' 180 plants have shut down recently. Private funding of pilot advanced biofuel plants has been another casualty of the recession. Unless ethanol blending targets such as those established in the 2007 energy law are boosted, development of these fuels may slow considerably. However, there is a glimmer of hope on the horizon for alternative biofuels. POET, a South Dakota-based ethanol producer, just announced an $8 million pilot plant to produce cellulosic ethanol from corn cobs which it plans to open in 2011.