Archive for Wednesday, February 27, 2008

Cargill suspends plans to build ethanol plant outside Topeka

February 27, 2008


— Cargill Inc. has suspended plans to build a $200 million ethanol plant outside Topeka, citing poor market conditions.

"The economics are not at a point where we see fit to move forward," company spokesman Bill Brady said. "The economics are not where they were a year and a half ago."

Asked when the company might reconsider its decision, Brady said: "Unless market conditions turn around, we have to remain suspended."

Brady wouldn't discuss the factors contributing to poor market conditions. But Jay O'Neil, a senior agricultural economist at Kansas State University, said escalating grain prices were making it difficult for ethanol plants to make a profit.

Corn, used to make ethanol, is at a record-high price at about $5 a bushel, and the cost to build an ethanol plant has doubled in the past five years. If high corn prices continue, O'Neil said, companies could face losses.

"The ethanol industry has fallen on more competitive and difficult times," O'Neil said. "They are going to struggle. You will see a consolidation in this process. Some will go out of business."

A year ago, Emerald Renewable Energy, a subsidiary of Cargill, proposed building the plant on 300 acres northwest of Topeka. The plant would have produced 100 million gallons of ethanol a year.

Emerald also proposed three other plants outside Kansas. Brady said no decisions have been made about those projects.

"Difficult market conditions are industrywide. We're in the process of making some tough decisions," he said.

The proposed plant outside Topeka generated opposition from local residents who feared it would create pollution, increase traffic, deplete groundwater and cause their property values to drop.

"That is great news," Richard Johnson, a Shawnee County resident and a leading opponent said after learning of Cargill's announcement. "That is absolutely wonderful."

However, he said, he remains "guarded" because Cargill is describing the project as suspended.


marcdeveraux 10 years, 3 months ago

Ethanol is no more than another handout to farmers, most of them corporations. We pay extra at the store for food because grain prices go up when ethanol plants increase demand for corn.This is just a tax on food that goes to the farmers who sell to the factories who produce ethanol.Last but not least, is the fact that it takes almost as much energy to make ethanol as ethanol provides,another scam on the american taxpayer.

walkdog262 10 years, 3 months ago

Hippies don't want ethanol - they know it's a huge boondoggle! Only the very, very rich want ethanol. And farmers who only care about themselves.

Richard Heckler 10 years, 3 months ago

"walkdog262 (Anonymous) says:

Hippies don't want ethanol - they know it's a huge boondoggle! Only the very, very rich want ethanol. And farmers who only care about themselves."

Yep... corporate farmers saw this one coming.

Godot 10 years, 3 months ago

Other market conditions that might have contributed to the decision: can't get financing, thanks to the credit crunch, and an expectation that the US is entering a recession.

Jackson 10 years, 3 months ago

Corn growers are laughing all the way to the bank!

webmocker 10 years, 3 months ago

For any who truly want to learn about our options for dealing with increasing oil prices and the eventual depletion of oil, the book Winning the Oil Endgame by Lovins, et al., is an excellent resource. It was commissioned by the Pentagon and researched rigorously by scientists and people working in the energy industry. It's available online, and at the local public library. It is refreshingly lacking in partisan inanity.

The website:

The abstract: "This independent, peer-reviewed synthesis for American business and military leaders charts a roadmap for getting the United States completely, attractively, and profitably off oil. Our strategy integrates four technological ways to displace oil: using oil twice as efficiently, then substituting biofuels, saved natural gas, and, optionally, hydrogen. Fully applying today's best efficiency technologies in a doubled-GDP 2025 economy would save half the projected U.S. oil use at half its forecast cost per barrel. Non-oil substitutes for the remaining consumption would also cost less than oil. These comparisons conservatively assign zero value to avoiding oil's many "externalized" costs, including the costs incurred by military insecurity, rivalry with developing countries, pollution, and depletion. The vehicle improvements and other savings required needn't be as fast as those achieved after the 1979 oil shock.

The route we suggest for the transition beyond oil will expand customer choice and wealth, and will be led by business for profit. We propose novel public policies to accelerate this transition that are market-oriented without taxes and innovation-driven without mandates. A $180-billion investment over the next decade will yield $130-billion annual savings by 2025; revitalize the automotive, truck, aviation, and hydrocarbon industries; create a million jobs in both industrial and rural areas; rebalance trade; make the United States more secure, prosperous, equitable, and environmentally healthy; encourage other countries to get off oil too; and make the world more developed, fair, and peaceful."

monkeyhawk 10 years, 3 months ago

"Twelve-month long drop in world temperatures wipes out a century of warming"

You won't find this on CNN.

Maybe all the stars in Hollywood and the Gores should give up the limos and set a wonderful example for those of us who think you all should be completely disregarded. I just have to wonder if you really believe this stuff, or are you merely perpetrating a fraud in order to feel important?

Just like this dude....

hornhunter 10 years, 3 months ago

Big oil companies are not going to recieve big tax breaks that they were given in the past. So now they will just raise gasoline prices so they will still be able to make the big bucks, watch out for increases everywhere.

cool, BMW is a real affordable make, but you may be able to get one if you stay off you tube and design another urban sprawl 'GAP' store. DA

Richard Heckler 10 years, 3 months ago

What are the hidden costs of America's imported oil? The answer is complex. It may ultimately be unknowable. But this hasn't daunted the likes of Milton Copulos.

Consumers don't dodge the bill for all these masked expenditures. Instead, they pay for them indirectly, through higher taxes, or by saddling their children and grandchildren with a ballooning national debt--one that's increasingly financed by foreigners. The result: Unaware of the true costs of their oil habit, U.S. motorists see no obvious reason to curb their energy gluttony.

Outside of Saudi Arabia, the United States has among the lowest gasoline taxes in the industrialized world. After decades of this car-promoting policy, the average American now emits as much carbon dioxide in a day as the average non-American emits in a week. But if Scientific American's package on global warming is correct, we can lose that dubious distinction by applying our technological prowess to the problem.

Disappointingly, the article on transportation (behind a paywall) acknowledged the problem of greenhouse gas emissions caused by the United States vehicle fleet and listed out some alternatives.

* Improve or change vehicle technology
* Change how we use our vehicles
* Reduce the size of our vehicles
* Use different fuels

Nowhere was the option of driving less promoted. The article did hint that there is a connection between land use patterns and driving habits, or mention the enormous energy savings that comes from subways, light rail and buses, all of which become feasible at urban residential densities. At best, the article's second option, "change how we use our vehicles," obliquely gets at the concept of reducing vehicle use (without using the "R" word), but this option wasn't really discussed, execpt to note that VW is developing some kind of "urban" car that does better in city driving. An accompanying article on efficiency (also behind a paywall), does highlight the importance of efficient design, but fails to mention basic facts, including that apartment buildings are inherently much more efficient than detached single family houses.

Reducing energy use needs to be part of any discussion about how we end our oil addiction, and the best way to do that is to build transit-oriented, residentially dense places (i.e., rebuild our cities). As David Owen noted in his October 2004 New Yorker article "Green Manhattan," if New York City were a state, it would be ranked 51st in energy use. If more places were like New York City, the many problems the Chicago Tribune describes in so much detail would not exist.

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