Although not mentioned in the article, Valero has quietly bought it's way into big-playerdom, number #2 or #3 in the industry, acquiring ten plants with 1.1 billion gallon/year capacity, to date.
In July they came out and declared that the ethanol subsidy is not needed. A power play indeed.
From Hard Assets Investor:
Summer's winding down and with it, demand for gasoline. Wholesale unleaded gasoline blendstock prices have dipped 7 percent since the end of June, as inventories have risen to five-month highs.
There have been no summer doldrums for ethanol, however. Prices for the alcohol fuel have climbed 20 percent since June, as its correlation with corn prices tightened. Currently, ethanol's 21-day rolling coefficient is 83 percent.
Ethanol Vs. Gasoline
That correlation has been mirrored by a 20 percent upsurge in corn prices since June. The September CBOT delivery spiked above $4.25 a bushel on Monday, as second-month ethanol prices stretched to $1.83 a gallon.
The fundamentals for ethanol were laid out in the latest Energy Department report, which showed a third consecutive weekly decline in ethanol production. High corn prices have discouraged refining. Inventories, according to the latest government figures, have fallen to a seven-month low of 17.9 million barrels.
Viewed from another perspective, refining margins have improved along with the fuel's price. The corn crush now yields $1.80 in product sales proceeds (ethanol and distillers' dry grains) for each bushel processed. Since June, gross processing margins have widened by 269 basis points (2.69 percent). Crude oil refining margins, meantime, have sunk 365 basis points....MORE