Latest Victim Of Ethanol Glut: BioTown, USA

biotownusa.jpgOn Sept. 13, 2005, Indiana Governor Mitch Daniels declared that the little town of Reynolds, Ind. — with a population of just over 500 — would officially become BioTown, USA. The idea was to re-energize the town and make it energy-self-sufficient through biofuels and waste-to-energy technology. Residents were encouraged to purchase alternative fuel vehicles; the town got its own biofuel station. Two years later, VeraSun (VSE), the ethanol producer that had been planning to build a 110-million-gallon-per-year ethanol biorefinery in Reynolds, says it will suspend construction of the refinery due to current market conditions.

That’s got to hurt. VeraSun is referring to what we chronicled yesterday: an ethanol surplus has caused a drop in prices, which, combined with a spike in the price of corn, has created hard times for ethanol producers. It’s not a good sign for the ethanol industry when not even the very BioTown itself is able to sustain ethanol production in the current market.

VeraSun says it would like to resume construction of the refinery in 2008, “depending upon the return of more favorable market conditions.” We’re not sure how much the town was depending on the refinery for jobs or the local economy, but BioTownians, we feel for you.

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