U. S. biofuels sector sees ally in Obama

U. S. biofuel makers, struggling to make a profit at a time of tumbling oil and gasoline prices, look upon president-elect Barack Obama as a staunch ally for growth.

Obama has expressed support for the federal requirement to use ethanol, made mostly from corn, as a motor fuel and says he will accelerate the development of new feedstocks. That is a great contrast from foodmakers and livestock producers who tried last summer to scale back the ethanol mandate.

Ethanol makers believe Obama’s victory will give them a more assured path into the future. The 2007 energy law sets a target of using 36 billion gallons of renewable fuels by 2022, including 15 billion gallons of grain-based ethanol by 2015.

“What is good for biofuels is good for much of agribusiness – particularly elements leveraged to the crop sector such as farm equipment, seed developers and others,” said analyst Mark McMinimy of Stanford Washington Research. “And in this sense, the election outcome may be the gift that keeps giving for biofuels and crop-related industries.”

Voters in western Minnesota re-elected Collin Peterson, the House Agriculture Committee chairman. A Democrat, Peterson advocated programs in the 2008 farm law that will encourage commercial development of cellulosic ethanol.

“I’d like to see us do nationwide a 15 per cent blend,” said Peterson in an interview with Reuters, up from the current 10 per cent ethanol content in gasoline. “Obama would be supportive of whatever we (Congress) come up with.”

The Renewable Fuels Association, a trade group, said Obama was steadfast in backing ethanol, biodiesel and other biofuels throughout the campaign.

Ethanol output, running at an annualized rate of 10 billion gallons a year, is approaching a “blend wall” when production equals the legal limit for use.

“In order to achieve the full promise offered by America’s ethanol industry, expanding markets for ethanol is critical,” said RFA earlier this week.

Ethanol production has tripled since 2003 and, at latest count, equalled 10 billion gallons a year. The industry has been stressed by highly volatile oil and corn prices.

The second-largest U. S. producer, VeraSun Energy Corp. filed for bankruptcy protection last week.

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