By Zack Colman - 07/09/12 07:26 PM EDT
The cost of biofuels has been a contentious point of late, with lawmakers from both parties criticizing the U.S. Navy’s “Great Green Fleet” aircraft carrier strike group for using a $26-per-gallon biofuel and petroleum mixture to power its six-week naval exercise in the Pacific Rim.
The Obama administration has stood firmly behind biofuels. The White House, along with the Navy and Agriculture and Energy departments, last week announced $62 million in new funding for biofuels research and development and bio-refineries.
But with about 1 billion gallons of ethanol on the market, “by historic measures, stocks are heavy” and should cover summer demand, Matt Hartwig, spokesman for the Renewable Fuels Association, said Monday in an email. Ethanol producers lowered production for the past several weeks, with last week registering as the year’s lowest level of production and hitting 10 percent below January output.
The ethanol industry also should hit its renewable fuel standard target of 13.2 billion gallons, with the Energy Information Administration showing annualized production reaching 13.9 billion gallons.
Ethanol pricing "remains somewhat independent" from corn stocks because they are considered more energy than agricultural commodity, Nathan Fields, director of biotechnology and economic analysis, told The Hill on Monday. Though corn prices will likely rise, ethanol might be insulated, he said.
"Ethanol exists much more closely tied to the energy markets, much more than the agricultural commodities markets," Fields said. "It's priced against gasoline."