In the News
Jun 1, 2023
U.S. fuel ethanol production was up 2 percent the week ending May 26, according to data released by the U.S. Energy Information Administration on June 1. Weekly ending stocks of fuel ethanol were up 1 percent. The agency also released weekly ethanol export data for the first time.
Fuel ethanol production averaged 1.004 million barrels per day the week ending May 26, up 21,000 barrels per day when compared to the 983,000 barrels per day of production reported for the previous week. When compared to the same week of last year, production for the week ending May 26 was down 67,000 barrels per day.
Weekly ending stocks of fuel ethanol expanded to 22.332 million barrels, up 291,000 barrels when compared to the 22.041 million barrels of stocks reported for the previous week. When compared to the same week of last year, stocks for the week ending May 26 were down 629,000 barrels.
According to the EIA, the U.S. exported approximately 54,000 barrels (2.27 million gallons) per day of ethanol the week ending May 26. No ethanol imports were reported for the week.
Read the original story here.
May 31, 2023
Whitefox Technologies is pleased to announce that The Andersons, Inc. has successfully installed the Whitefox ICE® membrane dehydration system at its ethanol plant located in Denison, Iowa. This is Whitefox’s eleventh installation in the U.S., and its fourth installation in Iowa.
Bill Krueger, Chief Operating Officer and President of The Andersons Trade and Processing, states “We have been evaluating Whitefox technology for some time, and saw that the system aligned with our goals for upgrading the Denison plant which include lower steam use and energy cost per gallon. It also helps to drive our objective of reducing carbon intensity across our production facilities. I am excited that this project is now completed as it addresses several of our strategic priorities.”
The Whitefox ICE® system treats existing recycling streams to both free up and debottleneck distillation-dehydration capacity, enabling The Andersons and other producers to lower natural gas usage, cut carbon emissions, improve plant cooling, and increase potential production capacity depending on the system design. Whitefox ICE® is integrated into existing corn ethanol production plants with minimal disruption and a small footprint.
Malcolm Rock, Whitefox COO, commented that “the goal of this installation is to decrease carbon emissions by reducing steam consumption per gallon of ethanol produced. Our process engineers have designed a tailored solution which fits the distinctive features of the Denison plant integrating heat where possible. Together with The Andersons, I am pleased to see the final stages of the project coming together. It has been a real pleasure to work with Bill Krueger, and the team at the Denison plant.”
ABOUT THE ANDERSONS INC.
The Andersons, Inc. (Nasdaq: ANDE) is a diversified company rooted in agriculture, conducting business in the commodity merchandising, renewables, and nutrient and industrial sectors. Investment in ethanol is a natural extension of The Andersons core business competencies in grain operations, corn originations, and commodity merchandising. In addition to being a significant investor in The Andersons Marathon Holdings LLC, they also manage the operations of their ethanol plants located in Albion, Michigan; Logansport, Indiana; Greenville, Ohio; and Denison, Iowa. Guided by its Statement of Principles, The Andersons is committed to providing extraordinary service to its customers, helping its employees improve, supporting its communities, and increasing the value of the company. For more information, please visit www.andersonsinc.com.
ABOUT WHITEFOX TECHNOLOGIES LIMITED
Whitefox specializes in technology development and process integration based on its proprietary membrane solutions. Whitefox ICE® (Integrated Cartridge Efficiency) is a bolt-on solution developed for the ethanol industry. With a small footprint, it is designed to de-bottleneck distillation and dehydration, which boosts output, improves CI scores by reducing energy and water consumption and reduces operation & maintenance costs by simplifying operations Whitefox provides solutions for all types of alcohols, biofuels, and renewable chemicals in the U.S., Canada, Europe, and South America. www.whitefox.com
Read the original press release here.
May 30, 2023
The USDA recently released its Grain Crushings and Co-Products Production Report for May, reporting that corn use for fuel ethanol production in March was up when compared to the previous month, but down from March 2022.
Total corn consumed for alcohol and other uses was 490 million bushels in March, up 11 percent from the previous month, but down 4 percent from March 2022. Usage included 91.7 percent for alcohol and 8.3 percent for other purposes.
Corn use for fuel alcohol in March was at 438 million bushels, up 10 percent from February, but down 3 percent when compared to same month of the previous year. Corn consumed for dry milling fuel production and wet milling fuel production was at 91.5 percent and 8.5 percent, respectively.
The USDA withheld the volume of sorghum consumed for fuel alcohol production in March to avoid disclosure of individual company data.
At dry mills, condensed distillers solubles production was at 81,415 tons, up from 77,506 tons in February, but down from 103,439 tons in March 2022. Corn oil production reached 177,081 tons, up from both 160,215 tons the previous month and 174,657 tons in March of last year. Distillers dried grains production expanded to 387,438 tons, up from both 338,869 tons in February and 372,813 tons in March 2022. Distillers dried grains with solubles production was at 1.7 million tons, up from 1.56 million tons the previous month, but down from 1.88 million tons in March of the previous year. Distillers wet grains production was at 1.3 million tons, up from 1.16 million tons in February, but down from 1.38 million tons in March of last year. Modified distillers wet grains production was at 505,767 tons, up from 466,269 tons the previous month, but down from 562,599 tons in March 2022.
At wet mills, corn germ meal production was at 48,872 tons, up from 44,421 tons in February, but down from 61,909 tons in March of the previous year. Corn gluten feed production reached 2932,483 tons, up from both 247,817 tons the previous month and 25,258 tons in March 2022. Corn gluten meal production reached 117,550 tons, up from both 108,496 tons in February and 109,130 tons in March 2022. Wet corn gluten feed production was at 187,120 tons, up from 185,051 tons the previous month, but down from 226,860 tons during the same month of last year.
At wet and dry mills, carbon dioxide captured was at 214,548 tons, up from 195,862 tons in February, but down from 249,346 tons in March 2022.
Read the original story here.
May 24, 2023
By Growth Energy
With drivers expected to hit the roads in near pre-pandemic numbers this Memorial Day weekend, Growth Energy—the nation’s largest biofuels trade association—urged travelers to fill up with Unleaded 88 (UNL88), a fuel blend with 15 percent ethanol, to save money at the pump and reduce their emissions over the holiday.
Memorial Day weekend travel is expected to increase by around 7 percent over last year with nearly 90 percent of that travel taking place on the roads, according to AAA, signaling a strong start to summer travel season.
With travel on the rise, consumers looking to save money on fuel should look at UNL88, also known as E15. In total, UNL88 has the potential to save drivers more than a combined $12 million just this weekend. That means more money in consumers’ pockets that they can spend on cookout supplies, fireworks, or maybe just a longer vacation.
Last summer, when the national average for a gallon of gas was more than $4, drivers were able to save 16-cents per gallon on average by using UNL88. UNL88 can also be used in 96 percent of vehicles on the road today and contributes to cleaner air, reducing smog-forming pollutants and lowering emissions of particulate matter up to 50 percent compared to gasoline.
“UNL88 makes it easy for drivers to save money at the pump and reduce their carbon emissions all in one step,” said Growth Energy CEO Emily Skor. “As the summer travel season officially begins, we hope all consumers take advantage of the cost savings and environmental benefits of filling up their cars and trucks with fuel that’s at least 15 percent ethanol.”
“Not many products exist in the fuel market today that allow drivers to both save money and lower their carbon emissions at the same time,” said Jennifer Forbess, Fuel Supply and Trading Manager at Midwest fuel retailer Kwik Trip Inc. “That’s what makes UNL88 such a popular, high-value fuel, and we hope our customers take advantage of this more affordable, lower-carbon product as they hit the road this holiday weekend.”
Travelers can plan their road-trip and locate gas stations selling E15 and other ethanol blends using Get Biofuel Fuel Finder. To date, Americans have driven approximately 75 billion miles on UNL 88. Since 2018 the number of miles has increased by an astounding 543 percent, according to Growth Energy calculations.
The U.S. Environmental Protection Agency (EPA) recently took an important step to allow continued sales of UNL88 (E15) throughout this summer and has proposed allowing year-round sales in eight Midwestern states beginning next year. Growth Energy and its member companies have urged the EPA to allow year-round sales of UNL88 to provide continued cost savings, increased energy independence, support for rural jobs, and immediate emissions reductions from automotive travel.
Read the original story here.
May 17, 2023
Using Market Access Program (MAP) and Agricultural Trade Promotion (ATP) funds, the U.S. Grains Council Mexico office has been conducting some grassroots market development work for U.S. DDGS to small-scale ruminant producers in Southeast Mexico. The Council started working in this region in 2015, showing to cattle producers how they could supplement their grass-fed cattle with U.S. DDGS and achieve faster growth rates and earlier-to-market cattle.
Some examples of the Council’s outreach efforts over the past seven years include:
- Feeding trials with small cattle producers demonstrating the improved animal performance and profitability using DDGS.
- Seminars with cattle associations to promote the trials and provide support to small farmers who do not get regular extension support.
- Partnering with local associations in Chiapas, which completed the construction of its warehouse to store and commercialize grains and DDGS for cattle ranchers from 14 local associations.
- Arranging the inauguration of the grain warehouse in Arriaga. This warehouse helps to increase the consumption of DDGS on the Chiapas coast since they are going to sell DDGS in 40-kilo bags for smaller clients.
- Signing MOUs with partner companies who will act as intermediaries in the distribution of U.S. DDGS to smaller cattle producers in the region.
Total DDGS sales in this region reached 300,000 MT through the ports of Southeast Mexico, an increase of 100 percent from when the Council started the program in 2015 when sales were only 145,000 MT. The value of these exports has increased from $44 million annually to $89 million in 2022, an increase of $45 million annually due to the Council’s long-term promotion efforts.
Read the original story here.
The U.S. Energy Information Administration maintained its forecasts for 2023 and 2024 fuel ethanol production in its latest Short-Term Energy Outlook, released May 9. The forecast for 2024 fuel ethanol blending was raised.
The EIA currently predicts fuel ethanol production will average 1 million barrels per day this year, increasing to 1.01 million barrels per day next year. Both forecasts were maintained from the April STEO. Fuel ethanol production averaged 1 million barrels per day in 2022.
On a quarterly basis, the agency predicts fuel ethanol production will average 1 million barrels per day during the second quarter of this year, falling to 990,000 barrels per day during the third and fourth quarters. Moving into 2024, ethanol production is currently expected to average 1.01 million barrels per day in the first and second quarters, falling to 1 million barrels per day in the third quarter and increasing to 1.03 million barrels per day in the final quarter of the year.
The EIA maintained its forecast for 2023 fuel ethanol blending at 930,000 barrels per day. The 2024 ethanol blending forecast was increased to 940,000 barrels per day, up from 930,000 barrels per day as predicted last month. Fuel ethanol blending averaged 910,000 barrels per day in 2022.
Read the original story here.
by Geoff Cooper
May 8, 2023
In April, the U.S. Environmental Protection Agency released a proposed regulation for what it calls “Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles.” While that title sounds official and impressive, let’s call the proposed regulation what it really is: an electric vehicle mandate. Why? Because unless automakers dramatically increase their production of EVs in the years ahead, they’ll have no way of complying with EPA’s ambitious proposed standards. EPA itself expects that, under the regulations, “EVs could account for 67% of new light-duty vehicle sales” by 2032.
Indeed, John Bozzella, head of the national trade association representing automakers, called EPA’s proposal “aggressive by any measure” and labeled the agency’s EV goals as “very high.” Rather than plunging headlong into the EV abyss, Bozzella recommended that “EPA and the petroleum industry should act quickly to concurrently lower the carbon intensity of liquid fuels. This will produce higher and faster returns by reducing emissions from not only new gas vehicles (including plug-in hybrid EVs), but from the millions of light-duty gas vehicles currently on the road."
We wholeheartedly agree.
And that’s why policymakers should be considering technology-neutral approaches for reducing carbon emissions instead of pursuing vehicle mandates that put all of our eggs into one basket. A smarter approach to carbon policy would be to set the emissions reduction goal, then let the marketplace determine the lowest-cost and most efficient ways of meeting that standard.
That’s exactly what the Next Generation Fuels Act would do.
This bipartisan legislation was introduced in the Senate in late March by Senators Chuck Grassley (R-IA), Amy Klobuchar (D-MN), Joni Ernst (R-IA) and Tammy Duckworth (D-IL), and the following week in the House by Reps. Mariannette Miller-Meeks (R-IA), Angie Craig (D-MN), Darin LaHood (R-IL), Nikki Budzinski (D-IL) and 16 others.
If signed into law, this bill would require more efficient high-octane, lower-carbon fuels beginning in 2028. The bill doesn’t dictate how regulated parties must achieve the higher octane and lower carbon requirements; it doesn’t require the use of a specific fuel or vehicle. Rather, it simply sets the standard for high octane (95 RON ramping up to 98 RON) and low carbon (the source of the octane boost must reduce GHG emissions by 40% compared to today’s gasoline), opens the marketplace to a broad array of high-octane, low-carbon sources by removing arcane regulatory barriers, then lets the market work its magic.The reintroduction of the Next Generation Fuels Act in both the House and Senate gives liquid fuels the opportunity to increase fuel efficiency while reducing tailpipe emissions, something that the Biden Administration is acutely focused on at this time. This bill would also keep our industry moving forward in pursuing our members’ commitment to a net-zero-carbon future and would demonstrate that there are alternatives to an all-EV future in the form of lower-cost, lower-emitting renewable liquid fuels that are ready to deploy in increased amounts today. RFA strongly supports the Next Generation Fuels Act, and we thank the many visionary leaders in Congress who support this landmark legislation. We look forward to working with clean fuel supporters in both chambers of Congress—and both political parties—to turn this bold vision into a reality.
Read the original story here.
May 4, 2023
March U.S. ethanol exports vaulted 27% to a ten-month high of 132.3 million gallons (mg). Canada was our largest destination for the 24th consecutive month given its 43% share of March exports, including 72% of all denatured shipments. Our neighbor’s imports of 56.6 mg, a 34% bump over February, represent the largest monthly volume of U.S. ethanol exports to a single country to date. Other major global customers in March included India (22.8 mg, up from zero to a 13-month high), the European Union (12.8 mg, +104%), the United Kingdom (8.7 mg, -11%), Peru (7.9 mg, +89% to an 11-month high), and Mexico (5.9 mg, +9%). Notably, exports considerably curbed to South Korea (5.2 mg, -50%), the Philippines (2.2 mg, -62%), and Jamaica (2.1 mg, -67%), while Brazil again remained essentially absent from the market with a 16% tariff on U.S. ethanol in place. Year-to-date U.S. ethanol exports total 354.1 mg, lagging 10% behind last year at this time and marking the smallest first-quarter exports since 2016.
The U.S. did not log any meaningful imports of ethanol for the third consecutive month.
March U.S. exports of dried distillers grains (DDGS), the animal feed co-product generated by dry-mill ethanol plants, swung 17% higher to 898,086 metric tons (mt) upon elevated volumes in our larger markets. Mexico remained our top customer for the ninth consecutive month, with imports tallying 209,812 mt, a 23% leap over February volumes and a ten-month high. Mexico, South Korea (127,685, +7%), and Turkey (103,346 mt, +153%) together captured half of our global market in March. Indonesia (68,832 mt, +43%), Vietnam (53,259 mt, up a tick), and Canada (48,360 mt, +4%) imported sizeable volumes as well. Year-to-date DDGS exports total 2.43 million mt, coming in 16% below last year at this time and representing the smallest first-quarter exports since 2019.
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May 3, 2023
U.S. EPA Administrator Michael Regan fielded questions on the availability E15 and carbon capture and storage (CCS) permitting during a May 3 hearing held by the U.S. Senate Committee on Appropriations.
Sen. Deb Fischer, R-Neb., applauded the U.S. EPA’s April 28 announcement that it will issue emergency waivers allowing E15 sales to continue nationwide during the summer 2023 driving season and asked Regan to support effort to enact a legislative fix allowing permanent access to year-round E15 in the U.S.
“Providing access to E15 helps families save money at the gas pump, it’s better for the environment, and it boosts our nation’s energy security,” Fischer said. “While the emergency fuel waiver is a good thing, I believe we need a permanent fix and I have a bipartisan bill for that—the Consumer and Fuel Retailer Choice Act. It ensures nationwide permanent access to E15.” She asked Regan if he would commit to working with her on the legislative effort.
“The president has pledged that biofuels—especially advanced biofuels—would play a part in this economy as we move forward, so I look forward to partnering with you and your staff with technical assistance to be sure that we can make E15 more accessible,” Regan said in response.
Members of the committee also questioned Regan on permitting for Class VI CCS injection wells and states’ efforts to achieve primary regulatory authority (primacy) over Class VI injection wells located within their states. Under current regulations, the EPA is the acting regulatory authority with regard to Class VI wells in all states except those that have been granted primacy. States must apply for primacy and prove that their Class VI regulations are at least as stringent as federal standards. North Dakota became the first state to be granted primacy in 2018, followed by Wyoming in 2020. The EPA on April 28 announced its intent to grant primacy to Louisiana as well.
Sen. Shelley Moore Capito, R-W.V., noted that at approximately 70 individual permit applications are currently pending with the EPA for Class VI injection wells. She asked Regan what measures the agency is taking to ensure those permits are prioritized and processed in a timely manner, noting that states that have been issued primacy are able to move through the Class VI permitting process much more quickly.
Regan confirmed that Class VI well application are a priority for the EPA. “I think the president has indicated that CCS is something that this administration supports,” he said. “We’ve learned a lot of lessons from state’s like North Dakota,” he added, noting that Louisiana’s primacy will serve as a model for other states that choose to move forward with that process. He said uniformity ensuring states submit similar applications will allow for expedited processing.
A full replay of the hearing is available on the Senate Appropriations Committee website.
Read the original story here.
May 2, 2023
U.S. operable biofuels production capacity increased in February, with gains for ethanol, biodiesel and renewable diesel and associated fuels, according to data released by the U.S. Energy Information Administration on April 28. Total feedstock consumption was up slightly when compared to February 2022.
Total biofuels capacity reached 22.718 billion gallons per year in February, up 509 MMgy when compared to the 22.209 billion gallons per year of capacity in place the previous month and up 1.595 billion gallon per year when compared to the 21.123 billion gallons per year of capacity in place as of February 2022.
Ethanol capacity reached 17.395 billion gallons per year in February, up 176 MMgy when compared to the previous month, but down 28 MMgy when compared to the same month of last year.
Biodiesel capacity was at 2.063 billion gallons per year in February, up 12 MMgy when compared to January, but down 169 MMgy when compared to February 2022.
Capacity for renewable diesel and associated fuels, including renewable heating oil, renewable jet fuel, renewable naphtha, renewable gasoline and other biofuels and biointermediates, reached 3.26 billion gallons per year in February, up 321 MMgy when compared to the previous month and up 1.792 billion gallons per year when compared to February 2022.
U.S. biofuel producers consumed 24.537 billion pounds of feedstock in February, down from 27.154 billion pounds in January, but up from 24.348 billion pounds consumed in February of the previous year.
An estimated 22.33 billion pounds of corn was consumed by U.S. biofuel producers in February, down from both 24.694 billion pounds consumed in January and 22.74 billion pounds consumed in February of last year. Grain sorghum consumption was at 208 million pounds in February, down from 264 million pounds the previous month, but up from 133 million pounds in February 2022.
Total soybean oil consumption reached 910 million pounds in February, with 536 million pounds consumed by biodiesel plants and 374 million pounds consumed by renewable diesel facilities. Total soybean oil consumption was at 941 million pounds in January, including 557 million pounds consumed at biodiesel plant and 384 million pounds consumed at renewable diesel facilities. Soybean oil consumption was at 741 million pounds in February 2022, including 519 million pounds consumed by biodiesel plants and 222 million pounds consumed by renewable diesel facilities.
U.S. biofuel producers consumed 207 million pounds of corn oil in February, down from 289 million pounds in January, but up from 188 million pounds in February of the previous year. Canola oil consumption was at 168 million pounds in February, down from 242 million pounds the previous month. The EIA withheld the volume of canola oil that went to biofuel production in February 2022 in order to avoid disclosure of individual company data.
According to EIA, biofuel producers consumed 404 million pounds of yellow grease, 192 million pounds of beef tallow, 33 million pounds of white grease and 22 million pounds of poultry fat in February. Consumption was at 404 million pounds, 199 million pounds, 41 million pounds, and 15 million pounds, respectively, in January; and at 306 million pounds, 130 million pounds, 38 million pounds, and 13 million pounds, respectively, in February 2022. The EIA withheld data on other types of waste oils, fats and greases consumed in order to avoid disclosure of individual company data.
An additional 63 million pounds of feedstock classified as “other” recycled feeds and wastes went to biofuel production in February, compared to 65 million pounds in January and 59 million pounds in February 2022. The EIA withheld data on yard and food waste feedstock and feedstock classified as “other” to avoid disclosure of individual company data.
Additional data is available on the EIA website.
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Apr 27, 2023
Novozymes released first quarter financial results on April 26, reporting that bioenergy sales were up 28 percent during the three-month period. Overall company sales were up 5 percent for the quarter.
According to Novozymes, the strong growth in bioenergy sales came in well ahead of expectations after a very strong ending to the quarter. The company said growth was partly driven by the timing of orders and more supportive market conditions. “The strong underlying performance was driven by the continued penetration of the broad and innovative solution toolbox allowing for higher yields, throughput, and byproduct value-capture for producers in a market environment that turned more favorable towards the end of the quarter,” Novozymes said in a statement.
The North American market experienced strong developments during the quarter despite an estimated 2 percent decrease in U.S. ethanol production. Novozymes said performance was also strong outside of North America, driven by innovation, capacity expansion of corn-based ethanol production in Latin America, and supported by growth in solutions for biodiesel production. Sales of enzymes used in second-generation biofuels production also contributed. Overall, growth was positively impacted by pricing, Novozymes added.
Bioenergy accounted for 23 percent of total company sales during the first quarter. Household care; food, beverages and human health; grain and tech processing; and agriculture, animal health and nutrition accounted for 27 percent, 22 percent, 13 percent and 15 percent of first quarter sales, respectively.
Total sales for the quarter were up 5 percent, with gains for bioenergy; household care; and agriculture, animal health and nutrition.
Read the original story here.
Apr 14, 2023
WASHINGTON - U.S. Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) and a bipartisan group of 14 colleagues urged the Environmental Protection Agency (EPA) to strengthen the Renewable Fuel Standard (RFS) by maintaining the blending requirements for 2023; denying all pending Small Refinery Exemptions (SREs); eliminating proposed retroactive cuts to the renewable volume obligations (RVOs); and setting RFS volumes at the statutory levels.
“The RFS creates competition in the marketplace, keeping fuel costs low for consumers while bringing down carbon emissions,”the senators wrote to EPA Administrator Michael Regan.“By taking the steps enumerated above, EPA can set the RFS on a path that provides stability and growth for the U.S. biofuel sector. In doing so, it can guarantee this essential program continues to function as intended—as a mechanism for reducing emissions, driving economic growth in rural communities, keeping gas prices low, and bolstering national security by promoting an essential homegrown energy source.”
In addition to Klobuchar and Grassley, the letter was also signed by Senators Tammy Duckworth (D-IL), John Thune (R-SD), Debbie Stabenow (D-MI), Deb Fischer (R-NE), Tina Smith (D-MN), Pete Ricketts (R-NE), Dick Durbin (D-IL), Joni Ernst (R-IA), Tammy Baldwin (D-WI), Roger Marshall (R-KS), Gary Peters (D-MI), Mike Rounds (R-SD), Sherrod Brown (D-OH), and Jerry Moran (R-KS).
Klobuchar has long been a strong advocate for investing in renewable fuel infrastructure, increasing American biofuel production, and upholding the Clean Air Act’s Renewable Fuel Standard (RFS). In March, she and Fischer reintroduced bipartisan legislation to make E15 available year round. TheConsumer and Fuel Retailer Choice Act of 2023would enable the year-round, nationwide sale of ethanol blends higher than 10 percent, helping to lower fuel prices and provide certainty in fuel markets for farmers and consumers.
Last July, Klobuchar introduced bipartisan legislation to lower fuel prices and improve vehicle efficiency. TheNext Generation Fuels Actwould allow the sale of fuels with higher-octane levels and greater amounts of ethanol.
Last April, Klobuchar led a bipartisan group of colleagues in pushing the Biden administration to expand American biofuel availability.
In March 2022, she and Ernst introduced theHome Front Energy Independence Act, bipartisan legislation to expand the availability and production of American biofuel, following President Biden’s ban on importing Russian oil.
Klobuchar and Grassley also introduced bipartisan legislation in December 2021 to provide certainty to biofuel producers by preventing the EPA from retroactively reducing RVO levels once finalized.
Full text of the letter is available here.
Read the original press release here.
Apr 17, 2023
Despite seasonally lower ethanol demand, U.S ethanol production and profitability were in line with long-term averages during the first quarter of 2023, according to CoBank Knowledge Exchange’s latest quarterly report, released April 6.
CoBank said the ethanol industry had a slow start in January, but finished the quarter strongly. Production during the three-month period averaged 15.4 billion gallons on an annualized basis, down slightly from 2022’s average of 15.5 billion gallons.
Pretax margins averaged only 7 cents per gallon at the start of the quarter, but increased to long-term average levels of 28 cents per gallon by the end of the period. According to CoBank, margins benefited from lower corn prices and natural gas energy costs at the close of the quarter.
CoBank also highlighted policy developments that took place during the quarter, including the reintroduction of the Next Generation Fuels Act by Sen. Chuck Grassley, R-Iowa. That bill aims to create a high-octane fuel standard and require automakers to manufacture vehicles that can use high-octane fuels.
A full copy of the quarterly report is available on CoBank’s website.
Read the original story here.
Apr 6, 2023
On Sunday, members of OPEC+, a consortium of the Organization of the Petroleum Exporting Countries and allied nations, announced further reductions in oil output through the end of the year totaling more than 1 million barrels per day (bpd). Additionally, Russia, which is part of the group, indicated that it would extend its previously announced 500,000 bpd production cut through year-end. In response, oil futures prices surged more than 6% on Monday, and well-known energy market analysts expect prices to continue to rise as global supplies tighten in the coming months.
Bad Timing
The OPEC+ announcement could hardly have come at a worse time. According to the Energy Information Administration (EIA), total U.S. inventories of crude oil and petroleum products are 6% below this time last year and are at a 19-year low seasonally. The Strategic Petroleum Reserve is at its lowest level in 40 years, rendering it difficult to use to balance supplies as was done last year in the aftermath of the Russian invasion of Ukraine. Gasoline inventories are 7% below year-ago levels and are at a 9-year low seasonally. And, the summer driving season—a time when gasoline demand and prices are at their highest—is just around the corner.
What the Analysts Are Saying
According to The Hill, Andrew Lipow “thinks that in the coming weeks, gasoline prices, which stood at about $3.50 per gallon on Monday, will rise between 12 and 16 cents per gallon.” Similarly, Tom Kloza of Oil Price Information Service “predicted an ‘immediate increase’ of 10 to 12 cents per gallon, and added that the cuts also have the potential to contribute to further increases later in the year.”
Bloomberg quoted Francisco Blanch of Bank of America as saying, “Any unexpected 1 million barrel per day change in supply or demand conditions over the course of a year can impact prices between $20 and $25 per barrel.” That would imply crude oil prices rising to around $100 per barrel (bbl).
Reuters indicated that “Rystad Energy said it believed the cuts will add to tightness in the oil market and lift prices above $100 a barrel for the rest of year, possibly taking Brent as high as $110 this summer.” It also noted that UBS expects prices of Brent crude oil, the international benchmark, to hit $100/bbl by June and that Goldman Sachs raised its December forecast for Brent crude to $95/bbl. Other analysts are also calling for prices to gravitate toward $100/bbl during the second half of the year.
Implications for Retail Gasoline Prices
To determine how these oil price forecasts would translate to U.S. retail prices of gasoline, RFA conducted a straightforward regression analysis. This was based on the tight relationship between oil prices — particularly Brent — and gasoline prices.
Two approaches were used for the analysis. First, retail gasoline prices were regressed against Brent crude oil spot prices using monthly data for the past 20 years. The gasoline price that was utilized is the all-grades, all-formulations price reported by the EIA. The correlation coefficient between the two data series is 0.94 (1.00 would indicate perfect positive correlation). The R-squared statistic for the regression is 0.88, which in practical terms implies that 88% of the variation in the retail gasoline price is “explained” by changes in the crude oil price.
The statistics would be marginally higher by including monthly “dummy” variables as explanatory variables or by using the regular unleaded price instead of the all-grades, all-formulations price. However, dummy variables were not used since implications of the OPEC+ cut for gasoline prices were not assessed on a monthly/seasonal basis. It is also worth noting that retail gasoline prices include an additional margin beyond wholesale prices, which can affect the tightness of the relationship to crude oil.
The second approach that was used was to regress the change in the retail gasoline price against the change in Brent crude spot prices. This was done since fuel prices often exhibit a trend over periods of time.
The results from the two approaches are similar. If the price of Brent crude were to rise to $95/bbl as a result of the OPEC+ production cut, the average retail gasoline price would be predicted to increase by $0.34-0.38 per gallon (gal) compared to the price shortly before the announcement. If it were to rise to $100/bbl, the gasoline price would be expected to increase by $0.44-0.50/gal.
EIA reports gasoline prices weekly rather than daily. However, AAA reported that the national average price for regular gasoline was $3.48/gal late last week. This is consistent with the $3.50/gal average price of regular gasoline reported by EIA for the week ended April 3. For both that week and the year to date, the differential between the all-grades, all-formulations price and the price of regular has averaged $0.11/gal. This implies that the all-grades, all-formulations price late last week would have been approximately $3.59/gal.
If Brent crude oil rises to $100/bbl due to the OPEC+ production cuts, as many analysts are predicting, the U.S. average retail gasoline price would be expected to increase to more than $4.00/gal. If the production cuts were to last for a year, that would equate to an additional cost to U.S. consumers of $64 billion, or nearly $500 per household.
Ethanol Is Helping Hold Down Prices and Can Help More
According to a recent study conducted by energy economists from the University of California-Berkeley and the Czech Republic, the use of ethanol reduced the price paid by U.S. drivers for gasoline by an average of $0.77/gal between 2019 and 2022. That was based on ethanol being blended into gasoline predominantly at a 10% rate (E10).
Sales of a higher 15% ethanol blend (E15) have become increasingly popular over the last several years and hit 1 billion gallons for the first time in 2022. An RFA analysis found that the availability of additional E15 volumes saved American consumers approximately $60 million last summer, when it was $0.20-0.30/gallon less expensive than regular gasoline (E10). However, summertime sales would have been far smaller had the Biden administration not granted a series of waivers for E15 from an obsolete fuel requirement.
Whereas many retailers had previously found it difficult or impossible to offer E15 during the summer months in conventional gasoline areas, in 2019 the Environmental Protection Agency issued a regulation allowing E15 to be sold year-round.[1] Then, in 2021 the D.C. Circuit Court of Appeals vacated the regulation, ruling in favor of oil refiners. The restriction would have returned last year, but the EPA invoked its authority to issue emergency waivers when “extreme and unusual fuel or fuel additive supply circumstances exist,” as was the case following the Russian invasion of Ukraine.
If the administration does not take action within the next month, E15 sales will drop precipitously in most of the country this summer, as was the pattern in conventional gasoline areas prior to 2019. Yet, the issuance of waivers is at least as justified by market conditions now as it was last year, since inventories of gasoline (and petroleum overall) are even lower, as discussed above. Allowing E15 to continue to be sold in conventional gasoline areas this summer—just as it has the last four years—would benefit American consumers and the environment and strengthen energy security.
[1] EPA limits the volatility of gasoline during the “high ozone season” every summer (Jun. 1-Sep. 15). Prior to EPA’s 2019 rule change, the practical volatility limit for E10 sold in conventional gasoline areas was 10 pounds per square inch (psi) Reid vapor pressure (RVP), but E15 was held to a 9-psi limit. EPA’s 2019 rule effectively extended the volatility limit for E15 to 10 psi, creating regulatory parity for E15 and E10.
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Apr 5, 2023
Biofuel and farm leaders today called on President Biden to get ahead of rising fuel costs by authorizing sales of E15 this summer. In a letter to the White House, six stakeholder groups noted that current conditions are analogous to those in place last summer, when President Biden waived outdated Reid Vapor Pressure (RVP) restrictions on E15. The move saved drivers up to nearly a dollar per gallon at the pump in some areas, and an average of 23 cents per gallon according to the Minnesota Department of Commerce.
“The ongoing conflict in Ukraine, now extending into its second year, continues to reverberate across global energy markets,” said the letter, whose signatories include the Renewable Fuels Association, Growth Energy, National Corn Growers Association, National Sorghum Producers, American Farm Bureau Federation and National Farmers Union. “At home, this conflict continues to cause fuel supply disruptions, high gasoline prices, and ongoing uncertainty for millions of Americans. To help remedy these disruptions, provide stability for American families, and support domestic energy and economic security, we urge the administration to authorize the summer sale of gasoline blended with up to 15 percent ethanol (E15).”
Advocates also outlined a range of “extreme and unusual” factors impacting the stability of U.S. fuel markets, including historically low domestic fuel inventories, record exports of U.S. fuel to allies overseas, and continued inflationary pressures on fuel consumers. Protecting summer access to E15 would help relieve pressure on U.S. fuel supplies, while reducing greenhouse gas emissions, lowering evaporative emissions, and supporting America’s farmers and rural economies, they argued.
“While a permanent solution that would allow E15 sales year-round remains an important necessity, we urge you to take action on a temporary, emergency RVP waiver as soon as possible to remedy current and expected supply challenges resulting from ongoing conflict in Ukraine,” concluded the letter.
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Mar 29, 2023
U.S. fuel ethanol production expanded by nearly 1 percent the week ending March 24, according to data released by the U.S. Energy Information Administration on March 29. Weekly ending stocks of fuel ethanol were down nearly 3 percent.
Fuel ethanol production averaged 1.003 million barrels per day the week ending March 24, up 6,000 barrels per day when compared to the 997,000 barrels per day of production reported for the previous week. When compared to the same week of last year, production for the week ending March 24 was down 33,000 barrels per day.
Weekly ending stocks of fuel ethanol fell to 25.527 million barrels the week ending March 24, down 661,000 barrels when compared to the 26.188 million barrels of stocks reported for the previous week. When compared to the same week of last year, stocks for the week ending March 24 were down 1.002 million barrels.
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