Ethanol hits a turning point as corn prices soar

Rising costs squeeze profits
By Joshua Boak - CHICAGO TRIBUNE
Updated: 06/15/08 6:57 AM

HENNEPIN, Ill. — When Mark Marquis started building his $180 million ethanol plant along the Illinois River, turning corn into fuel seemed like a license to print money. Ethanol enjoyed the unflinching support of the federal government, making it the preferred alternative to foreign oil.
But as Marquis Energy recently loaded its first batch of fuel onto a barge, ethanol refiners found themselves facing a vicious backlash.

Corn climbed past $6 a bushel in the past year, threatening to expose plants to losses as ethanol failed to match that increase. Rising food prices led Congress to consider halting its aggressive promotion of ethanol. And Wall Street is brutally punishing the few publicly traded players, as investments in new refineries begin to slow.

“We have a modest margin at this point, enough to stay in business,” Marquis said. “But there’s not enough margin to encourage the construction of any new ethanol plants. The investors want a significant margin, not a modest one.”

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