Rough Year for Pacific Ethanol Starting to Improve

Cindy Zimmerman

Pacific Ethanol, Inc. reported its financial results for the year so far last Friday and top executives expressed optimism for the future after a rough year.

“Positive ethanol production margins in the current market are supporting our efforts to conclude several strategic initiatives to strengthen our balance sheet and position the company to benefit from increased demand for low carbon, high octane ethanol,” said Pacific Ethanol CEO Neil Koehler during a third quarter results call for the company. “We are confident that the final rule for the 2020 Renewable Fuel Standard blending requirements will result in greater ethanol use in the domestic market, and resolution of trade disputes will bolster export demand, putting our company and the industry back on a growth trajectory.”

Pacific Ethanol’s operating loss for the first three quarters of the year is $36.8 million, compared to $21.3 million for the same period in 2018. “During the third quarter, the ethanol industry experienced some of the worst production margins in years, due in large part to EPA’s excessive granting of small refinery exemptions and the continuing trade dispute with China,” said Koehler, who currently serves as chairman of the Renewable Fuels Association.

However, Koehler says conditions are now starting to improve. “Starting at the end of the third quarter, and continuing in this quarter, production margins rebounded to levels better than any time in the last two years, resulting in positive margins,” he said.

Listen to Koehler’s statement on Pacific Ethanol third quarter results.

Pacific Ethanol CEO Neil Koehler (5:06)

Audio, Ethanol, Ethanol News

Senators Stand Up for RFS

Cindy Zimmerman

A group of Midwest state Senators submitted comments to the Environmental Protection Agency yesterday supporting the Renewable Fuel Standard. Sens. Deb Fischer (R-Neb.), Chuck Grassley (R-IA), Joni Ernst (R-IA), John Thune (R-S.D.), Mike Rounds (R-S.D.), Roy Blunt (R-Mo.), and Mike Braun (R-Ind.) each submitted comments regarding the EPA’s supplemental rule on the RFS and individual letters to EPA Administrator Andrew Wheeler, in which they expressed concerns about the way the agency would calculate the reallocation of renewable fuel gallons lost due to exemptions for oil refineries.

“It is time again for the EPA to get this policy right, respect the President’s intent, and uphold the law as it was written. This means providing certainty that they will ensure that 15 billion gallons of ethanol will be blended each year,” said Sen. Ernst.

Renewable Fuels Association president and CEO Geoff Cooper thanked the senators for their support, as news broke that Valero Energy this week temporarily halted production of ethanol at plants in Michigan and Indiana, bringing to 21 the number of plants that have been closed or idled this year. “The only path to restore credibility to this process is for the EPA to project SREs based on the actual exemptions granted in the past three years. Anything else is a broken promise that will kill more jobs and keep plants shuttered,” said Cooper.

The comment period on the EPA supplemental proposal will remain open until November 29.

EPA, Ethanol, Ethanol News

Flex Fuel Jeep Wrangler Debuts in Vegas

Cindy Zimmerman

The Renewable Fuels Association (RFA) and Kenny Hauk of Hauk Designs unveiled a new project at the 2019 SEMA Show in Las Vegas this week that highlights the benefits of higher ethanol blends in high performance vehicles – a Flex Fuel Jeep Wrangler with more than 1,000 horsepower using a high-octane, low-carbon fuel containing up to 85 percent ethanol (E85).

Fans can watch the Hauk team design and build the RFA flex-fuel Wrangler in a special “Hauk Machines” Amazon Prime video series now airing. Since August, a series of five-minute mini-episodes have been airing on RFA’s Facebook page as a preview.

“This project is all about educating different consumer groups in a fun and innovative way,” said RFA Vice President for Industry Relations Robert White. “At RFA, we want to push the boundaries to show the potential of ethanol as a fuel for a wide variety of vehicles and demographics, especially when special interests tell us it can’t be done. Ethanol is a high-powered fuel that is perfectly suited for on road and off-road applications. It also helps keep our air and water clean, something important to off-road enthusiasts and conservationists. Kenny Hauk is the perfect person to help us tell this story and educate consumers globally through social media, television and at future events.”

White says plans are underway to get the one-of-a-kind Wrangler on the road for special events and shows around the country, to showcase the power and opportunities behind ethanol. He talks about the project in this interview:

Interview with Robert White on Flex Fuel Jeep Wrangler (8:11)

Audio, E85, Ethanol, Ethanol News, Octane, RFA

Democrat Reps Urge Extension of Biofuels Tax Incentive

Cindy Zimmerman

Rep. Abby Finkenauer (D-IA) and Rep. Kendra Horn (D-OK) spearheaded a Democratic caucus letter to House leadership this week urging action on extension of the biodiesel tax credit. Specifically, the lawmakers are asking for extensions of the biodiesel, alternative fuel vehicle refueling property, and second generation biofuel producer tax credits.

“The biodiesel tax credit has become vital to Iowa’s economy by bringing down gas prices, creating opportunities for farmers and biofuel producers, and bringing down greenhouse gas emissions. Especially now, with farm income at its lowest point in more than a decade and our farmers caught in the cross-hairs of the President’s trade war with China, is not the time to walk away from tax credits that have become so important to Iowa’s soybean growers,” Congresswoman Finkenauer said.

The National Biodiesel Board (NBB) thanked the Democratic Representatives, especially the freshman members, and emphasized that renewing the biodiesel tax credits before the end of the year is crucial to reviving production, reopening production facilities, and saving jobs.

NBB Vice President of Federal Affairs Kurt Kovarik said, “Nine biodiesel producers – in Alabama, Connecticut, Georgia, Iowa, Michigan and Texas – have been forced to close, cut production, and lay off workers. That’s because blenders count on Congress to renew the tax credit and demand a discount on the price of biodiesel. As a result, producers have taken a loss for nearly two years now. The entire industry needs Congress to act before the end of the year and renew expired tax extenders.”

Biodiesel, NBB

Latest Ethanol Export and Production Numbers

Cindy Zimmerman

Ethanol production is recovering while ethanol exports are relaxing, according to the latest data available, as analyzed by the Renewable Fuels Association (RFA).

According to Energy Information Administration data for the week ending Nov. 1, ethanol production was 1.014 million barrels per day (b/d) or 42.59 million gallons daily. The previous week was the first time in six weeks that production got back up above 1 million b/d. But production is now more than 5% below the same week a year ago. The four-week average ethanol production rate increased 1.2% to an annualized rate of 15.27 billion gallons.

Ethanol stocks increased 3.7% to 21.9 million barrels following two weeks of declining volumes. However, inventories were 5.5% lower than the same week last year.

The latest U.S. ethanol export data is from September, showing a decrease of 18% to 100.3 million gallons (mg).

Canada was the top destination for the fifth consecutive month, scaling 4% higher to 32.4 mg. Exports to Brazil climbed 3% to a three-month high of 17.6 mg. In a departure from recent norms, sales to these two markets alone accounted for half of U.S. ethanol exports in September. U.S. sales were also strong in South Korea (8.9 mg, +55%), Peru (8.1 mg, +37%), the Philippines (6.9 mg, +224%), the United Arab Emirates (6.7 mg, +165%), the Netherlands (6.1 mg, +65%), and Norway (3.2 mg, a 70-month high). Total year-to-date exports of U.S. ethanol stand at 1.10 billion gallons. This implies an annualized export volume of 1.47 billion gallons which, if realized, would be the second-largest volume on record.

Ethanol, Ethanol News, Exports, Production, RFA

Nebraska Ethanol Board Offers E15 Workshop

Cindy Zimmerman

The Nebraska Ethanol Board is holding a workshop Nov. 13 in Norfolk for fuel retailers from across the state to learn more about the benefits and ease of offering E15 ethanol blended fuel.

This one-day workshop will provide attendees with a myriad of takeaways and dispel misconceptions about the cost of offering E15. Attendees will hear a keynote from Sara Brenden, Manager of Market Development with Growth Energy; best practices from a fuel retailer and guidance from a terminal representative. Presenters will provide resources to make implementing and labeling infrastructure easier and affordable. Speakers also include the Nebraska State Fire Marshal, and Nebraska Weights & Measures.

There is no cost to attend the workshop but registration in requested by November 12.

E15 Workshop registration and information

E15, Ethanol, Ethanol News, Retailers

Groups Ask President Trump to Uphold Biofuels Promise

Cindy Zimmerman

A broad coalition of biofuel and farm advocates today sent a letter to the White House calling on President Trump to uphold his commitment to accurately account for refinery waivers and support the Renewable Fuel Standard (RFS).

The letter was signed by 60 organizations, including ethanol, biodiesel, corn and soybean groups on the state and national level.

“Mr. President, we share a common vision regarding the RFS. We want to reopen biofuel plants and restore demand for America’s farm products. We are asking for SRE accountability based on a rolling average of the actual volumes exempted by the EPA during the three most recently completed compliance years. This simple fix will provide the market and regulatory certainty necessary to bring back rural jobs and restore demand. The proposal – as written – will not provide the relief we believe you are seeking,” the groups wrote.

National Corn Growers Association (NCGA) Ethanol Action Team member and Minnesota farmer Brian Thalmann testified on behalf of the corn farmers last week gave the same message to EPA regarding the agency’s inadequate proposal that would account for waivers based on Department of Energy’s (DOE) recommendations, rather than the actual gallons waived by EPA. “I have a simple message – when it comes the Renewable Fuel Standard, we need EPA to follow the law. As farmers, we follow rules put in place by state and federal agencies, including the EPA. We are simply asking EPA to do the same for us,” Thalmann said.

Listen to Thalmann’s testimony here:
EPA Hearing Thalmann Testimony

Audio, corn, Ethanol, Ethanol News, NCGA

RFA Backs Up Claims of Waiver Damage to Ethanol Demand

Cindy Zimmerman

As Mark Twain once said, “Facts are stubborn things, but statistics are pliable.”

During last week’s House Energy & Commerce Committee subcommittee hearing on the impact of small refinery exemptions, Renewable Fuels Association President and CEO Geoff Cooper and American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson sparred over the interpretation of recent Energy Information Association (EIA) data as to what it shows as far as ethanol consumption.

According to Thompson, “EIA data demonstrate consumption and blending are at or near all-time highs.” Cooper says it shows ethanol consumption is “falling since the massive outbreak of SREs in early 2018.”

Not only is ethanol’s share of the gasoline pool falling in the wake of SREs, but the absolute volume of ethanol blended is decreasing as well. Domestic ethanol consumption peaked a 14.49 billion gallons in 2017, fell for the first time in 22 years in 2018, and is projected by EIA to fall again in 2019.

Cooper gets into more detail about his differences with Thompson’s testimony in this blog post.

Listen to Cooper and Thompson answering questions from Rep. Buddy Carter of Georgia about their conflicting testimony.
House hearing exchange

Audio, Ethanol, Ethanol News

Ethanol Report on Hearing Highlights

Cindy Zimmerman

Back to back hearings on topics related to small refinery exemptions under the Renewable Fuel Standard brought ethanol supporters out to explain how EPA’s abuse of the waivers is hurting farmers and producers and how the new proposed rule is insufficient to fix the problem.

In this edition of The Ethanol Report, we hear from some of those who testified at a House Energy and Commerce subcommittee hearing and the public hearing in Michigan on EPA’s proposed supplemental rule to address the waivers, including Renewable Fuels Association (RFA) president and CEO Geoff Cooper, Iowa farmer and ethanol plant president Kelly Nieuwenhuis, Rep. Dave Loebsack (D-IA), Iowa Secretary of Agriculture Mike Naig, and Show Me Ethanol general manager Brian Pasbrig.

Ethanol Report on Hearing Highlights (18:45)

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Audio, Ethanol, Ethanol News, Ethanol Report, RFA

Ethanol Opportunities in West Africa

Cindy Zimmerman

U.S. Deputy Secretary of Agriculture Steve Censky is on a trade mission to West Africa this week to help United States exporters unlock new opportunities in a region where strong economic growth is driving demand for imported food and farm products, including ethanol.

“Here in West Africa they are using another product as an octane enhancer rather than ethanol,” said Censky during a press briefing from Accra, Ghana on Wednesday. “It is a product that has some corrosive effects, not only on gas tanks and in engines, but also has some health and environmental issues similar to what our own MTBE had in the United States.” Censky says that offers a great opportunity for ethanol in that market for U.S. ethanol producers.

The United States already accounts for nearly 48 percent of Nigeria’s ethanol imports, making that country our 15th largest market for exports. As the auto fleet expands and demand for clean fuel increases, the market for U.S. ethanol is expected to grow.

Listen to Censky’s comments here:
USDA Deputy Censky ethanol comments from West Africa (:48)

Audio, Ethanol, Ethanol News, Exports, USDA