Citigroup: Energy bill will push ethanol prices higher

By Tom Stundza -- Purchasing, 12/28/2007 8:29:00 AM

Fuel-grade ethanol prices—up 20% over the past three months to $2.31/gallon this week—are likely to rise further, fueled by the new U.S. energy bill, Citigroup analysts say in a report to clients. “We firmly believe the new energy bill will serve as a significant catalyst to the ethanol industry, as the higher mandated ethanol levels stipulated by the new renewable fuel standard should serve to bring ethanol supply and demand back into balance, thereby strengthening ethanol’s pricing fundamentals,” according to the report. The new energy bill stipulates annual biofuels consumption of 36 billion gallons by 2022. The U.S., the world’s largest consumer of ethanol, consumed 5.6 billion gallons in 2006.

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