RFA Comments on August Ethanol Production and Demand
Date Posted: November 4, 2008
Washington, DC—According to the Energy Information Administration (EIA), American ethanol facilities were producing 647,000 barrels per day (b/d) in August.
That is up from 614,000 b/d in July.
Ethanol demand, as calculated by the Renewable Fuels Association, continued to outpace production.
In August, the RFA estimated ethanol demand at 661,000 b/d.
As an annualized figure, demand exceeds 10 billion gallons a year.
This demand is approaching the legal limit of ethanol allowed, known colloquially as the “blend wall.”
In order to achieve the full promise offered by America’s ethanol industry, expanding markets for ethanol is critical.
The RFA released the following statistics:
August 2008 Statistics
(mg = million gallons; b/d = barrels per day)
Fuel Ethanol Production ... 842.5 mg ... 647,000 b/d
Fuel Ethanol Use ... 861.0 mg ... 661,000 b/d
Fuel Ethanol Stocks ... 625.0 mg ... 22.5 days of reserve
Fuel Ethanol Exports ... 0.0 mg* ... n/a
Fuel Ethanol Imports ... 89.9 mg**
*Jim Jordan and Associates ** Source: U.S. International Trade Commission
A couple of interesting numbers stand out in the last report by EIA.
First, the growth in ethanol production in August came amid declining corn prices that today are half of what they were at their peak in late June.
Such a dynamic further erodes the argument of livestock, poultry and food processing companies that have argued ethanol is responsible for the dramatic increase in food prices.
It also calls into question the reports from groups such as the World Bank, the United Nations and others that US ethanol production is responsible for high corn prices.
Further evidence of the fallacy of these arguments can be seen here.
Second, the dramatic increase in imports seen in August signals the urgency with which importers were seeking to capitalize on the final days of a loophole in trade regulations known as the duty drawback.
This provision allows for the import of ethanol and the export of another fuel, like jet fuel, to recapture the $0.54 tariff placed on foreign ethanol imports.
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