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As drought withers US corn crop, ethanol industry feels the squeeze

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“The price of corn got so high and the price of ethanol didn’t rise fast enough, that these plants were losing money on every gallon of ethanol we made,” says Bill Day, a spokesman for Valero Energy Corp. Valero, a petroleum refining company based in San Antonio, Texas, has closed two of its 10 ethanol plants, including the one in Linden. Overall the company’s plants are working at 50 percent of capacity. So far, Mr. Day says, Valero has not been forced to lay off any ethanol plant workers.

With 211 plants in 27 states, the ethanol industry produced 13.9 billion gallons in 2011. According to the Renewable Fuels Association, a trade organization based in Washington, ethanol production is down about 13 percent since early June.

“You’ve seen some pretty dramatic curtailing in ethanol production,” says Matt Hartwig, a spokesman for the association.

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