Restrictions on when ethanol can be used in Georgia Florida and other parts of the SE are cutting demand by about 3 billion gallons ayear sayd Eitan Bertstein an analyst at Friedman Billings Ramsey & CO in Arlington VA. That total is equal to 45% of current nation demand. Gasoline use is 142 billion gallons a year.

Tennessee and Arizona are among states that waived or modified rules to per mit more ethanol use. Georgia Agriculture Commissioner Tommy Irvin in Atlanta has scheduled heargins for Nov 27 & 28 to debate whether to relax fuel regulations. Florida is considering similar changes says Matt Curran chief of the states bureau of petroleum inspection

We are in the process of trying to make our laws more friendly to the ethanol producers says Jill Stuckey director of alternative fuels at the Georgia environmental Facilities authority

Georgia and florida may not increase ethanol use soon enough to deplete the growing supply Bernstein says. Even with distillers being cancelled or scaled back so many new mills are under construction that annual US output may reach 11.3 billions gallons by the end of next year he says.

Indiana Gov Mitch Daniels in 2005 declared the town of Reynolds Bio Town USA pledging to make the hamlet of 550 people a showcase for cop based fuels.

Reynolds municipal vehicles run on gasoline that 85% ethanol and diesel made from soy beans. Residents received incentives to buy GM cars that can use more ethanol than c onvential vehicles

Two years later after ethanol prices tumbled to a 28 month low Verasun Energy of Brookings SD halted mwork on a 110 million gallon distiller in the town.

Five other projects have been cancelled since Oct 1 including an Alta Iowa mill for Bioguel energy corp which sold shares to the public for the first time in June.

The stock dropped 55 percent since the offering wiping out more than $190 million in market value.

The abandoned projercts represent 539 million gallons of annmual ethanol output, equivalent to 8 % of current UScapacity, according to William Blair & Co the chicago based investment bank

Kari Elassal a spokeswoman for DE Shaw Group didnt respond to a message seeking comment for this story. The NY based firms holdings include stock in Verasun, US Bioenergy and Sacramento based Pacific Ethanol which have declined an average of 59% this year

Pacific Ethanol fell 18 percent in Nasdaq Stock market trading on Monday leading declines by ethanol makers after sayd late last week that Gates matyy sell his stake. The fuel bounded back 3% in trading on Tuesday as crude oil and gasoline surged near records.

Metalmark Capital llc which manages the Morgan Stanley Private capital funds and controls a stake in ethanolmaker Aventine renewable energy holdings inc didnt respond to a telephone message seeking comment

lenders have cut off funds for mills that werent already under construction when prices began to drop say Ron miller chief exec officer at Pekin Ill based Aventine.

Today its very difficult if not impossible to get financing based upon these current margins Miller said on an Oct 31 conference call with analysts and investory.

That was an article in the Vancouver Sun today . Glad we haveoils refineries