The U.S. Federal Trade Commission issued its latest report on the ethanol production, concluding that the industry is not yet sufficiently concentrated to respond effectively to market constraints.
The report, titled “2008 Report on Ethanol Market Concentration,” finds that the largest ethanol producer’s share of capacity has continued to fall each
year as new firms have entered the market and existing firms have added
capacity. Currently, the largest producer accounts for approximately 11% of
domestic ethanol capacity, down from 16% in 2007, 21% in 2006, 26% in
2005, and 41% in 2000.
As of September 2008, 160 firms produced ethanol in the United States–a one-year increase of 57 firms.
With so many players on the field, no single firm, or small group of firms, can wield sufficient market power to set or coordinate price or output levels, according to the report.
In Related News…
Missouri filling stations have been selling gasoline without blended ethanol, due to a state law that allows retailers to sell straight gasoline, if the price of ethanol surpasses the price of gasoline. Link to the full story below.
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