Ethanol Industry Wants Government Intervention to Fix Railroad Issues

by Henry Kaplan | Jul 08, 2014 |

The beleaguered ethanol industry is being squeezed by all sides. The EPA has been talking about cutting back the federal mandate that keeps them afloat. Their recent distribution troubles meant that they couldn’t provide enough ethanol to fulfill that mandate in the first place. And with no clear decision on the future of the federal mandate, despite being well into 2014, it’s very hard to plan for the future.

Now, the ethanol industry group Growth Energy is asking for government relief for ethanol shippers:

Growth Energy, which represents ethanol manufacturers, told the Surface Transportation Board that producers of the renewable fuel should be given the same relief that the agency provided to grain shippers in June.

Last month, the STB ordered Canadian Pacific Railway and BNSF Railway to provide the agency an update on their plans to reduce the backlog of grain cars across their networks -- a step welcomed by agricultural groups concerned that farmers could struggle to get their crops to market this fall.

In a letter sent Monday to the STB, Tom Buis, chief executive with Growth Energy, said with more than 61 percent of all ethanol delivered by rail, it is "imperative that these issues be directly addressed and given the same priority as grain shipments."

Last winter, bad weather led to railroad snafus, which led to backed up ethanol shipments, which led to reduced production, as ethanol plants couldn’t ship out their product fast enough. The ethanol industry wants to see something change in the rail system to prevent that from happening again.

As for the Surface Transportation Board, the regulators with the authority to make those changes, they’ve only said that they've heard the request.

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