US based Vireol Bio Energy has suspended ethanol production at its facility in Hopewell, Virginia, due to the dip in crude oil prices.
Vireol chief executive officer Peter McGenity was cited by Bloomberg as saying that the firm was prompted to close its facility since oil prices had seen a 48% drop in 2014, which had led to a further decrease in gasoline prices.
The closed Vireol Bio Energy facility had a production capacity of 62 million gallons of ethanol per year.
Oil refiners in the US are required to blend ethanol into gasoline. At present, ethanol accounts for nearly 10% of the total gasoline consumption in the country.
In May, US President Barack Obama had proposed to cut down the targets for ethanol consumption from statutory levels.
Besides appearing to be detrimental for growth, the uncertainty around the proposal has caused the biofuel industry to be increasingly dependent on exports.
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By GlobalDataMcGenity was quoted by Bloomberg as saying: "We decided to shutter the plant until the market improves."
Though September delivery rates for denatured ethanol rose 1.7 cents, or 1.2% to $1.46 per gallon on the Chicago Board of Trade, prices have dipped by nearly 33% as compared to last year.
