According to the latest Energy Information Administration figures, ethanol facilities were producing 647,000 barrels per day in August, up from 614,000 in July.
The Renewable Fuels Association reports that demand continued to outpace production, with demand in August calculated at 661,000 barrels per day, which exceeds 10 billion gallons a year. “This demand is approaching the legal limit of ethanol allowed, known colloquially as the “blend wall.'” according to RFA. “In order to achieve the full promise offered by America’s ethanol industry, expanding markets for ethanol is critical.”
RFA notes that 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, which “erodes the argument of livestock, poultry and food processing companies that have argued ethanol is responsible for the dramatic increase in food prices.”
There was also a dramatic increase in ethanol imports for August, which RFA says is due to importers 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.