energy.agwired.com

The latest Energy Information Administration data analyzed by the Renewable Fuels Association shows a significant drop in ethanol production and stocks for the week ending September 25.

According RFA, ethanol production scaled back by 2.8%, or 25,000 barrels per day (b/d), to 881,000 b/d—equivalent to 37.00 million gallons daily and the smallest output in fifteen weeks. The four-week average ethanol production rate declined 1.2% to 913,000 b/d, equivalent to an annualized rate of 14.00 billion gallons (bg).

Ethanol stocks dropped by 1.5% to 19.7 million barrels, which was 15.2% below year-ago volumes and the smallest reserves since the end of 2016. Inventories thinned across all regions except the Gulf Coast.

In addition, gasoline demand remains 6.7% lower than a year ago, and refiner/blender net inputs of ethanol at 840,000 b/d, equivalent to 12.88 bg annualized, was 9.0% below the year-earlier level as a result of the continuing effects of the COVID-19 pandemic.

The House of Representatives passed another COVID economic relief package last week which provides for $2.2 trillion in coronavirus relief and includes an important provision to help renewable fuel producers impacted by the pandemic. The package includes the Renewable Fuel Reimbursement Program provision which, if passed into law, would provide a 45-cent-per-gallon payment for qualified fuel produced by eligible producers from Jan. 1 through May 1 of this year.

Renewable Fuels Association (RFA) President and CEO Geoff Cooper says the legislation represents a “potential lifeline for the 350,000 men and women whose jobs depend on a healthy and vibrant ethanol industry.”

“Just recently, a study by university economists found that ethanol producers will experience roughly $8 billion in losses this year due to the pandemic’s impact on world fuel markets,” said Cooper. “While market conditions have improved since the spring, the ethanol industry is still struggling to fully recover from the pandemic, and ethanol producers across the country remain under financial stress.”

The package is considered dead on arrival in the Republican controlled Senate, which is on break now until Oct. 19 after three Republican senators tested positive for COVID-19. The revised Heroes bill is independent of ongoing negotiations on a different package between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, which would result in a new bill that would need to be separately drafted and voted on in both houses.

A new study published in the Journal of Agricultural & Food Industrial Organization finds that ethanol producers will experience roughly $8 billion in losses this year due to the impact of the COVID-19 pandemic on world fuel markets.

The study, conducted by agricultural economists from the University of Florida and Arizona State University, estimates ethanol producer losses due to COVID-19 at $7 billion, with the economic loss growing to between $7.9 to $8.6 billion when unemployment effects are included. However, the authors say their estimates likely “understate the cost of COVID-19” to the ethanol industry because the impact of the pandemic on co-product output, demand and prices is not included.

Renewable Fuels Association President and CEO Geoff Cooper said the new study corroborates the findings of an RFA analysis published in July, which found pandemic-related losses could be $7 billion or more, and it underscores the need for emergency relief for the industry.

“While market conditions have improved since the spring, the ethanol industry is still struggling to fully recover from the pandemic, and ethanol producers across the country remain under financial stress,” Cooper said. “There is strong bipartisan support for providing assistance to renewable fuel producers in both the House and Senate. We remain hopeful that a fourth COVID-19 aid package, with emergency relief for ethanol producers, will finally be pushed over the goal line in the weeks ahead.”