Dropping oil prices damaging Kansas ethanol industry

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FILE – In this July 26, 2013, file photo, a motorist fills up with gasoline containing ethanol in Des Moines. The Trump administration says Friday, Oct. 4, 2019, it plans to implement new rules that will increase demand for ethanol, reversing a decline caused by exemptions given to oil refineries. (AP Photo/Charlie Riedel, File)

HUTCHINSON, Kan. (AP) – A sharp drop in gas prices is hurting the ethanol industry in Kansas.

Two of the state’s ethanol plants are idle and nine others have cut production by at least 40%. Gas prices were declining before the coronavirus spread, but prices fell more than 50% after the pandemic started.

That caused prices for ethanol, which makes up 10% of much of the fuel in the U.S., to plunge. Prairie Horizon Agri-Energy in Phillipsburg has temporarily stopped production, as has the state’s newest plant in Colwich.

In response, some plants have begun producing ethanol that can be used in hand sanitizer.

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