Monday, February 27, 2006

Biofuel distributors see strong demand

Ethanol plants have attracted hundreds of investors, including Microsoft Corp.'s Bill Gates -- who sunk $84 million into West Coast producer Pacific Ethanol Inc. -- and venture capitalist Vinod Khosla, who is seeding BC International, which will make fuel from switchgrass. But just a handful of companies in the corn belt hold the keys to distributing the fuel, which will prove crucial to making ethanol available at pumps across the country.

The U.S. ethanol industry now has 95 plants nationwide. Analysts say by 2012 it will double in volume, from producing 4.3 billion to 7.5 billion gallons of biofuel. That growth will be aided by the Energy Policy Act of 2005, which gives ethanol producers sizable subsidies, including a federal tax credit for small refiners.

Archer Daniels Midland Co. Chairman and CEO G. Allen Andreas told analysts Tuesday he expects producers will get another bump since ethanol companies' rising demand for American-grown corn will push corn prices higher. ADM, headquartered in Decatur, Ill., is one of the world's largest corn processors.

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