March 30, 2006

Corporations Collaborate to Market Ethanol

Ethanol producers often engage in multi-corporation collaborations to guarantee a market for their products. Such plans fill the gaps of understanding between, for instance, flex-fuel car manufacturers and their purchasers and/or between energy producers and their distributors, while contributing stability to the transition from gasoline to E85 and other blends of ethanol. They also provide each collaborator's marketing departments opportunities to advertise messages that deliver customers for their products. General Motors, Abengoa Bioenergy (an international ethanol producer), and Kroger Stores have entered into such an agreement to help build a market in Texas. Part of a recent news release found at Trading Markets website is below.

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General Motors, Abengoa Bioenergy, Kroger Stores And Governors' Ethanol Coalition To Jointly Promote Alternative Fuel E85 - Update
Thursday, March 30, 2006

(RTTNews) - Thursday early morning, the Detroit, Michigan-based General Motors Corp. world's largest automaker, announced plans to enter into a collaborative arrangement with Abengoa Bioenergy and Kroger Stores to help more Texas motorists power their GM FlexFuel Vehicles with environment friendly, alternative fuel E85, a blend of 85 percent ethanol and 15 percent gasoline. FlexFuel vehicles can run on any combination of gasoline and/or E85. In a separate press release, the company also announced it's partnership with the Governors' Ethanol Coalition or GEC to provide E85 capable vehicles for use in GEC member states.

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1 - Abengoa Bioenergy is a subsidiary of Abengoa S.A., a 2.0 billion euro holding company headquartered in Seville, Spain. The company owns and operates five facilities throughout the United States and Europe.
2 - Headquartered in Cincinnati, Ohio, Kroger Stores is one of the nation's largest retail grocery chains.
3 - Governors' Ethanol Coalition is a bipartisan group of governors devoted to the promotion and increased use of ethanol.


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3 comments:

Nigel Gamecock said...

Ethanol producers often engage in multi-corporation collaborations to guarantee a market for their products.

Scott,

Where I come from, one could also call that a cartel engaged in market manipulation.

Best,

Nigel

C. Scott Miller, EDP said...

I would hardly term this a "vertical monopoly." I don't see anyone getting excluded by this plan. To get alternative energy technologies into their necessary position in the marketplace will take huge investments - probably $100+ million/plant. Something has to be sold first. Gauging from the heroes I've met, I can tell you, it hasn't been and isn't likely to be easy. In the absence of an autocratic government Manhattan project approach, I think this collaboration is a pretty good alternative.

But, like you, I would hate to see all BioEnergy control funnel to a Microsoft, a U.S. Steel, or a Standard Oil, or even a "benevolent" D.O.E. I think this is a totally different paradigm shift with de-centralization of resources, capitalization, and authority a major feature.

Thanks for writing.

Nigel Gamecock said...

I would hate to see all BioEnergy control funnel to a Microsoft, a U.S. Steel, or a Standard Oil, or even a "benevolent" D.O.E.

Scott,

I would hate that also, but that is where we are headed. If corn ethanol ever pans out as having a positive net energy balance, big corporations with deep pockets will jump into the market. (How could their boards of directors keep them out of a making a product with a production process that magically produced more than it consumed?)

That's even a business strategy of ADM. They have started buying up the smaller, farmer developed ethanol plants that have been struggling for lack of capital or management experience. I'm sure ADM understands what they are doing.

Best,

Nigel Gamecock