(Oilprice.com) When gas prices plummeted during the recession and at least half of US ethanol producers went bankrupt in the 2008-2009 ethanol crash, ethanol production continued to increase. But ethanol will crash again in the face of a summer drought, and this time the crash will be more definitive.
The difference this time around is that the ethanol will not crash because of product value, but because of under-supply of feedstock, like corn.
The US is now experiencing its worst drought in over half a century; the United Nations is warning of a food crisis and EIA is warning that exports will be significantly affected. In the meantime, corn-ethanol producers are struggling to defend a federal mandate that sets out ambitious ethanol requirements.