US ethanol producers suffer €3.1 billion COVID hit
US ethanol producers have lost $3.8 billion (€3.1 billion) since the start of the pandemic up to November last year, according to the Renewable Fuels Association.
With COVID-19 cases on the rise again, consumption of ethanol-blended petrol is rapidly falling again, threatening to derail the economic recovery in the ethanol industry.
In response to reduced travel and lower fuel demand, ethanol producers slashed production by 2 billion gallons between March and November and cuts are expected to continue for months to come.
In the first week of December, consumption of both petrol and ethanol fell to their lowest points since May, according to data from the Energy Information Administration.
“As Congress debates another COVID-19 relief package, we implore policymakers to consider the devastating economic impact the pandemic has had on renewable fuel producers,” said RFA President and CEO Geoff Cooper. “Our new analysis provides an in-depth look at how rural communities have suffered. The decrease in ethanol production has idled or permanently closed plants across the heartland and caused job losses in rural communities where good employment is often hard to find. As an industry deemed critical and essential to America, we call on Congress to act swiftly to provide some targeted relief to our nation’s renewable fuels industry.”
According to RFA Chief Economist Scott Richman, who authored the white paper, the 2 billion gallon cut in ethanol production meant a significant 700-million bushel decline in the use of corn for ethanol.
He stressed that while this report looks at a one time period, the effects of the pandemic will continue for a long time to come.
“Gasoline and ethanol consumption are still substantially below pre-pandemic levels, and it is likely that this will persist for a number of months,” Richman wrote. “Moreover, the winter is typically a time when ethanol prices are weak, and the decline in demand has already started to intensify pressure on industry margins. As a result, the economic impact on the ethanol industry and, in turn, the agriculture sector is likely to deepen in the coming months.”
With COVID-19 cases on the rise again, consumption of ethanol-blended petrol is rapidly falling again, threatening to derail the economic recovery in the ethanol industry.
In response to reduced travel and lower fuel demand, ethanol producers slashed production by 2 billion gallons between March and November and cuts are expected to continue for months to come.
In the first week of December, consumption of both petrol and ethanol fell to their lowest points since May, according to data from the Energy Information Administration.
“As Congress debates another COVID-19 relief package, we implore policymakers to consider the devastating economic impact the pandemic has had on renewable fuel producers,” said RFA President and CEO Geoff Cooper. “Our new analysis provides an in-depth look at how rural communities have suffered. The decrease in ethanol production has idled or permanently closed plants across the heartland and caused job losses in rural communities where good employment is often hard to find. As an industry deemed critical and essential to America, we call on Congress to act swiftly to provide some targeted relief to our nation’s renewable fuels industry.”
According to RFA Chief Economist Scott Richman, who authored the white paper, the 2 billion gallon cut in ethanol production meant a significant 700-million bushel decline in the use of corn for ethanol.
He stressed that while this report looks at a one time period, the effects of the pandemic will continue for a long time to come.
“Gasoline and ethanol consumption are still substantially below pre-pandemic levels, and it is likely that this will persist for a number of months,” Richman wrote. “Moreover, the winter is typically a time when ethanol prices are weak, and the decline in demand has already started to intensify pressure on industry margins. As a result, the economic impact on the ethanol industry and, in turn, the agriculture sector is likely to deepen in the coming months.”
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