(JACKSON, NE) One product that helps hold down the price of gas is ethanol.
But that corn-based fuel additive could face problems too, if high gas prices and poor yields persist this year.
Empty corn fields represent new beginnings for the ethanol business, but if this year is anything like the last you could see a difference at the pump in the very near future.
It's a waiting game every year to see what mother nature will do.
Last year corn withered away under the hot sun, warm temperatures and lack of moisture, leaving the ethanol industry with higher priced corn.
"Do I have concerns that the high price of corn will not be, that the ethanol will not keep pace with the higher price corn, yea we worry about that all the time," says Chuck Hofland, CEO of Siouxland Ethanol.
Combine the high price of corn with high gas prices and simple economics shows it's a possible recipe for disaster.
"We could see reduction in the demand for gasoline at the pump. And if we see that demand drop, than we could see even, further less demand for the ethanol that blends with it," says Hofland.
According to USA today, 20 of the nation's 211 ethanol plants stopped producing the bio-fuel because of the drought. Even still, the government predicts a corn crop of 14.5 billion bushels for 2013 which would be the biggest yield ever recorded.
"Every year we get a chance to produce a new crop, so we'll have this year's crop, until we harvest the 2013 crop, we'll take a look at what production is there, it may be better than we expected, it might be worse, we won't have any idea until we get there," he says.
And Hofland says the grass always looks greener on the other side.
"If we had cheap corn, and we produced a lot more ethanol, do we have a demand for all the ethanol that would be produced. We have to find a demand side to that balance as well," Hofland says.
Hofland says even if mother nature delivers a good corn crop in 2013, Siouxland Ethanol will still have to ration its use of corn because of shortages the past two years.
Hleigh@siouxlandnews.com
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