Environment Forum

What a difference a year makes – Valero embraces corn ethanol

April 2, 2009

At last year’s American Petroleum Institute conference, Bill Klesse, CEO of leading U.S. oil refiner Valero, slammed federal policymakers who push subsidies and mandates for production of ethanol, saying that using corn to make it would make food so expensive it would cause more misery than global warming.

“All of these programs are just a huge transfer of wealth from our industry (oil) to the Midwest farms,” Klesse said in March 2008 speech.

A year later, Klesse has decided to join rather than fight. If the money is going to the Midwest corn farms, why not cash in, right? Valero two weeks ago was chosen by a bankruptcy court as the winning bidder for two more VeraSun ethanol-producing plants.  The sale of seven former VeraSun plants closed on Wednesday and two more are expected to close soon.

A year and two weeks ago, Klesse said the federal government should stop favoring ethanol with subsidies. Now, Klesse and Valero are securing a supply of ethanol that it needs to mix with its gasoline.

“We expect increases in the Renewable Fuels Standard to continue,” Klesse said two weeks ago when Valero’s bid for VeraSun’s plants was awarded.

The plants, in Iowa, Minnesota, South Dakota, Nebraska, and Indiana together will have a combined capacity that is 7.5 percent of the current operating U.S. ethanol capacity.

On Thursday, a Valero spokesman said the company needs to go full throttle on producing ethanol to mix with its gasoline. See the Reuters story.

(This is a photo of an ethanol plant taken in 2008. Reuters photo by Mark Blinch.)

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