http://www.ethanolrfa.org/ en Copyright 2012 2012-05-15T14:05:20+00:00 http://www.ethanolrfa.org/exchange/entry/ethanol-keeps-gasoline-prices-1.09-cheaper/ http://www.ethanolrfa.org/exchange/entry/ethanol-keeps-gasoline-prices-1.09-cheaper/ The Center for Agricultural and Rural Development (CARD) released on May 15 a study by economists at the University of Wisconsin and Iowa State University examining the impact of increased ethanol consumption on wholesale gasoline prices. The study, authored by Professors Dermot Hayes and Xiaodong Du, is an update to a 2009 peer-reviewed paper published in the journal Energy Policy.[1] Cheaper prices at the pump: The research by Professors Hayes and Du found significant gasoline cost reductions associated with domestic ethanol production and use.  These price impacts include: In 2011, ethanol reduced wholesale gasoline prices by $1.09 per gallon nationally. From January 2000 to December 2011, the growth in ethanol production reduced wholesale gasoline prices by $0.29 per gallon on average across all regions, equivalent to “a 17% reduction over what gasoline prices would have been without ethanol production.” More money in Americans’ pockets: The reduction in gasoline prices due to ethanol has very real benefits for the average American household budget, including: Ethanol reduced the average American household’s spending on gasoline by more than $1,200 last year, based on average gasoline consumption data.[2] Since 2000, ethanol has helped save $39.8 billion annually in excess gasoline costs – roughly $340 per household per year. The 2011 impact of $1.09/gallon is up from $0.89/gallon in 2010. The authors attribute the more pronounced impact to “increasing ethanol production and higher crude oil prices,” as well as “[a] wider than normal price differential between ethanol and gasoline prices.”   Cost competitiveness, oil displacement drive savings: Several factors, from surging ethanol production to the wholesale price differential between ethanol and gas, contribute to ethanol’s price dampening effects on gasoline prices. According to the CARD study: “The surge in ethanol production in recent years has essentially added 10% to the volume of fuel available for gasoline powered cars and in so doing it has allowed the US to switch from being a major importer of finished gasoline to a major exporter of both gasoline and ethanol.” “Average crude oil price increased from about $80/barrel in 2010 to about $95/barrel in 2011. Correspondingly, average U.S. wholesale gasoline prices have risen 30% from 2010-2011.  A wider than normal price differential between ethanol and gasoline prices provides further economic incentives for ethanol production and consumption…” Price reductions Vary regionally, but all are substantial Logically, the ethanol’s impact on gas prices varies regionally based on how much ethanol is used in a given area.  According to the study, the most profound price reductions over the past 12 years have occurred in the Midwest. The map (right) shows average regional wholesale gasoline price reductions due to ethanol from 2000-2011 ($/gal). Energy content a negligible factor When confronted by irrefutable facts regarding ethanol’s price performance, critics immediately resort to the old standby argument that ethanol’s lower energy content means it must be priced below gasoline to provide the same cost per mile.  In discussing the impacts of ethanol’s lower energy content on gasoline spending, the authors cite research from the EPA noting that 10% ethanol blends result in just a 2.5-3% reduction in mileage. They conclude that the “…impact of ethanol’s lower energy content on gas prices is much smaller than the price impacts we have measured and does not change the overall conclusions of our analysis.” THE BOTTOM LINE This spring, gasoline prices have flirted with the $4 per gallon mark for the second time in four years. America’s ethanol producers have responsibly built out a domestic renewable fuel industry that provides a cost-competitive, carbon-reducing, job-creating alternative to high-priced imported oil.  As this new CARD research demonstrates, the gas price benefits of increased ethanol use go far beyond the simple price savings seen at the gas pump. [1] Available for purchase at: http://www.sciencedirect.com/science/article/pii/S0301421509002584 [2] In 2011, American drivers consumed 131.2 billion gallons of gasoline for transportation (Energy Information Administration) and there were 116.7 million U.S. households (Census Bureau). Thus, each household consumed 1,124 gallons gasoline on average. Increased ethanol use reduced gasoline prices by an average of $1.09 per gallon in 2011 (Hayes & Du, 2012), resulting in $1,225 in reduced spending on gasoline for the average household.   Ethanol, Gas Prices 2012-05-15T14:05:20+00:00 http://www.ethanolrfa.org/exchange/entry/ethanol-ddgs-exports-move-higher-in-march/ http://www.ethanolrfa.org/exchange/entry/ethanol-ddgs-exports-move-higher-in-march/ U.S. exports of ethanol (denatured and undenatured, non-beverage) totaled 83.4 million gallons (mg) in March, according to government data released this morning. That’s up 11% from February and marks the highest monthly total of the year so far. First-quarter ethanol exports amounted to 234.5 mg, implying an annualized total for 2012 of more than 900 mg. Canada was the leading importer of U.S. product in March, bringing in 21.8 mg (as the result of an ongoing glitch in reporting, exports to Canada were reported as denatured ethanol for use other than fuel, even though anecdotal reports suggest it was indeed used for fuel). The United Kingdom, Brazil, United Arab Emirates (UAE), and the Netherlands were other top destinations in March. Exports of denatured ethanol for fuel use totaled 44.8 mg in March, up 12% from February. The United Kingdom was again the top customer (12.4 mg), followed by Brazil (9.9 mg), and UAE (7.7 mg). Exports of undenatured ethanol for fuel use tallied 16 mg, down slightly from February. The Netherlands (4.7 mg), Mexico (3.9 mg), and Nigeria (3.2 mg) were leading destinations. Today’s data suggests 22 mg of denatured ethanol was exported for uses other than fuel. As mentioned earlier, the lion’s share (99%) of this product went to Canada, and it likely was for fuel use. Non-beverage undenatured ethanol exports for uses other than fuel were reported at 641,314 gallons in March. Exports of distillers grains (or DDGS), the animal feed co-product manufactured by ethanol dry mills, totaled 641,402 metric tons (mt) in March. That marks a 5% increase over February exports. China returned to the top spot as the leading importer, with 189,844 mt. Mexico dropped to No. 2, with 112,015 mt of imports and Canada held third with 56,060 mt. First-quarter DDGS exports totaled 1.86 million mt. *New categories as of 1/2012. Because 1/2012 exports were mis-categorized, they are presented here using the previous categories. Due to a reporting anomaly, ethanol exports to Canada for fuel use are categorized under “Denatured, non-fuel use.” DDGS, Ethanol, Exports 2012-05-10T17:27:05+00:00 http://www.ethanolrfa.org/exchange/entry/usda-projects-record-corn-crop-in-2012what-does-it-mean-for-ethanol/ http://www.ethanolrfa.org/exchange/entry/usda-projects-record-corn-crop-in-2012what-does-it-mean-for-ethanol/ This morning, USDA released its first estimate of the 2012 corn crop--and it is a big one.  According to today’s USDA projections, record U.S. corn production of 14.79 billion bushels is expected in 2012. That’s up 19% from last year’s crop and is 1.7 billion bushels (13%) larger than the previous record of 13.09 billion bushels in 2009. Based on planting progress and weather to date, USDA is projecting an average yield per acre of 166 bushels, which would also be a new record. Many were expecting big numbers in today’s report, but the market likely was caught by surprise at just how big the yield and crop estimates ended up being. On the demand side, USDA is projecting record corn use in 2012/13. The agency expects corn use for feed and residual to jump by about 20% to 5.45 billion bushels. When ethanol feed co-products are added to corn for feed and residual use, the total amount of corn and corn co-products expected to be fed to livestock rises to 7 billion bushels—an all-time record. Meanwhile, exports are expected to increase 12% over last year to 1.9 billion bushels. Food, seed and industrial use (other than ethanol) is expected to grow slightly to 1.43 billion bushels. In fact, at 5 billion bushels, corn use for ethanol and co-products is the only demand category not expected to grow in 2012/13. After all 2012/13 demands are met, USDA expects carry-out stocks to be near 1.9 billion bushels, more than double the projected stocks remaining after 2011/12.   While these are just early estimates, it is clear that this year’s corn crop is likely to be an all-time record bin-buster. Harvest is still a long way off, and these numbers could change by the fall. But, with normal growing conditions, it appears likely that farmers will continue to amply satisfy all demands for corn. This should put an end to the phony “food vs. fuel” campaign, but we know better—even the most stubborn facts haven’t stopped ethanol’s critics from continuing to pursue their respective political agendas in the past. The following is some context for this year’s likely record crop: At 14.79 billion bushels, the 2012 corn crop would:•             be a record crop by far, beating the 2009 crop of 13.09 billion bushels               by 11%.•             be 65% larger than the crop from 10 years ago (8.97 billion bushels               in 2002).•             be more than twice as large as the average-sized annual corn crop               in the decade of the 1980s (7.15 billion bushels on average). The 2012 projected yield of 166 bushels per acre would:•             be a record yield, beating out the 2009 average yield of 164.7 bushels               per acre.•             be only the third time in history yields have topped 160 bu/acre, the               others being 2009 (164.7) and 2004 (160.4).•             be 35% higher than the average yield from the 1990s and 12% higher               than the average yield since 2000.  2012/13 projected carry-out of 1.88 billion bushels would:•             be more than double the 2011/12 carry-out of 851 billion bushels.•             be the highest level of carry-out in seven years (2005/06 carry-out was               1.97 billion bushels).•             be the fourth-largest carry-out in the last 20 years.•             be 26% larger than the average carry-out since 2000. Ethanol, Production 2012-05-10T15:46:08+00:00 http://www.ethanolrfa.org/exchange/entry/dont-mess-with-the-rfs-part-2-advanced-ethanol-legislative-agenda/ http://www.ethanolrfa.org/exchange/entry/dont-mess-with-the-rfs-part-2-advanced-ethanol-legislative-agenda/ Ethanol, Renewable Fuels Standard 2012-05-01T19:53:32+00:00 http://www.ethanolrfa.org/exchange/entry/answering-crocodile-tears/ http://www.ethanolrfa.org/exchange/entry/answering-crocodile-tears/ In testimony before the Joint Economic Committee on April 26th, Mr. Thomas O’Malley, chairman of PBF Energy, attempted to tar and feather ethanol and the Renewable Fuel Standard (RFS) as the root cause of refinery closures in the Northeast. Mr. O’Malley went as far as to say, “The reason for the closure of the refineries in Pennsylvania is that they didn’t make money, and the reason they didn’t make money is that you took away their market.  You delivered the market to the farm industry.” Beyond not passing the sniff test (no rationale adult believes that oil’s dominance over the nation’s transportation fuels is in immediate jeopardy), Mr. O’Malley’s comments are more reflective of the petroleum industry’s crusade against renewable fuels and a willingness to play fast and loose with the facts. A fair examination of the factors affecting gas prices in the Northeast not only would have shown that ethanol and the RFS have nothing to do with the recent refinery closures, but it also would have revealed that ethanol is actually helping to reduce prices at the pump for drivers in the region. The economic difficulties facing East Coast refineries boil down to two simple and well-documented factors: First, most East Coast refineries cannot process the lower-cost types of crude oil that are increasing in supply in North America. As a result, oil acquisition costs for East Coast refineries are substantially higher than for refineries in other regions. Second, due to record high crude oil prices in recent years, demand for gasoline and other finished refinery products has fallen precipitously. Consumers have responded to record high oil and gasoline prices by driving less and purchasing more fuel efficient vehicles. Lower demand for refined products has led to significant refinery overcapacity in the East Coast region. As reported recently by CNN Money, refineries in the Northeast “…are losing money because they are old and cannot process the cheaper, heavier types of oil that are increasingly in supply from Canada's oil sands, Saudi Arabia, Venezuela and elsewhere.”[1] Notably, over the past several years some 98 percent of the oil refined in the East Coast region is imported from foreign countries, most of whom set their prices based on Brent crude. While the East Coast refining sector is still heavily dependent on high-priced oil imports from OPEC nations and North Sea countries, other regions, like the Midwest now source nearly all of their oil domestically or from our North American neighbors. Additional data from EIA show that since January 2011, East Coast refiners have paid an average of $18 per barrel more for oil than their competitors in the Midwest and $7 per barrel more than refineries located on the West Coast and along the Gulf of Mexico. While paying sharply higher prices than their competitors for crude oil, East Coast refineries are selling refined products for generally the same prices as refiners in other regions. Without question, the significantly higher oil acquisition costs for East Coast refineries makes it very difficult for them to succeed in what the American Petroleum Institute witness at the hearing described as a “highly competitive” and “low-profit margin” industry. Further, it is telling that the owners of the shuttered refineries themselves—Sunoco and ConocoPhillips—didn’t mention ethanol or the RFS as precipitating causes of their economic difficulties when they announced the closures.   In his testimony to the Committee, Mr. O’Malley suggested that increased ethanol use has been a leading cause of the recent financial difficulties faced by East Coast refineries. However, what Mr. O’Malley failed to mention is that ethanol has been blended with gasoline in the Northeast region at the 10 percent level for many years. In fact, refiners and blenders in the East Coast region are actually using slightly less ethanol today than they were two years ago. Moreover, the RFS is a national program and ethanol is blended with gasoline from border to border and coast to coast. If the RFS were truly the cause of refinery difficulties in the Northeast, as Mr. O’Malley contends, it would stand to reason that refineries in other regions—who must also comply with the requirements of the RFS—would be facing similar financial challenges. On the contrary, refinery capacity utilization rates in other regions are strong and, by all accounts, major refining companies are in good health. Perhaps most troubling is that the Committee allowed Mr. O’Malley to turn the hearing into a witch hunt against ethanol and, in so doing, lost focus on the more pressing and substantive issue:  sustained high gasoline prices.  Had the Committee focused on the advertised subject of the hearing, members would have quickly learned that the object of Mr. O’Malley’s ire—ethanol—is actually the best tool available today for exerting downward pressure on oil and gasoline prices. Despite Mr. O’Malley’s false assertion that ethanol is “more expensive than the product coming from refineries,” data from the Chicago Mercantile Exchange clearly show that ethanol is selling for $1 per gallon less than gasoline at the wholesale level today (even after the expiration of the ethanol blender’s tax credit on Dec. 31, 2011). Further, a 2011 analysis by economists at the University of Wisconsin and Iowa State University found that ethanol reduced East Coast gasoline prices by $0.58/gallon in 2010 and an average of $0.16/gallon from 2000 to 2010.[2] As former New York Senator Daniel Patrick Moynihan used to say, “Everyone is entitled to his own opinion, but not his own facts.” [1] Hargreaves, Steve. “Refinery closures risk Northeast gas price spike.” CNN Money. April 10, 2012. http://money.cnn.com/2012/04/10/news/economy/refineries-gas-prices/index.htm [2] See Du & Hayes. “The Impact of Ethanol Production on US and Regional Gasoline Markets: An Update to May 2009.” Center for Rural and Agricultural Development (CARD). April 2011. http://www.card.iastate.edu/publications/synopsis.aspx?id=1160     Ethanol, Oil, Renewable Fuels Standard 2012-05-01T19:18:43+00:00 http://www.ethanolrfa.org/exchange/entry/dont-mess-with-the-rfs-part-1/ http://www.ethanolrfa.org/exchange/entry/dont-mess-with-the-rfs-part-1/ Ethanol, Energy, Renewable Fuels Standard 2012-04-24T18:40:50+00:00 http://www.ethanolrfa.org/exchange/entry/ethanol-and-ddgs-exports-are-steady-in-februrary/ http://www.ethanolrfa.org/exchange/entry/ethanol-and-ddgs-exports-are-steady-in-februrary/ The U.S. exported 74.8 million gallons (mg) of ethanol (denatured and undenatured, non-beverage) in February, according to government data released today. February exports were just 2% below January 2012 exports, but 25% above year-ago (February 2011) levels. Year-to-date exports stand at 151.1 mg, indicating an annualized total of just over 900 mg for 2012. Notably, exports for the first two months of 2012 are 29% above the first two months of last year. Canada, the United Kingdom, Finland and Brazil were top destinations in February. Whereas the Census Bureau previously reported U.S. ethanol exports in two simple categories (denatured ethanol and undenatured ethanol, non-beverage use), it recently began reporting exports in four categories: denatured ethanol, for fuel use; denatured ethanol, for use other than fuel; undenatured ethanol, for fuel use; and non-beverage undenatured ethanol, for use other than fuel. It appears Census is still working out the kinks of this new reporting convention, as the January export figures were clearly miscategorized and some of the February data appear questionable. In any case, the data show February exports of denatured ethanol for fuel use totaling 39.9 mg. The United Kingdom was the leading importer of U.S. denatured ethanol, bringing in 11.7 mg in February. Peru (8.7 mg), the United Arab Emirates (6.7 mg), Finland (5.8 mg) and Brazil (4.2 mg) rounded out the top five. Undenatured ethanol for fuel use totaled 17.3 mg, according to the data. Brazil was tops with 5.2 mg, followed by Finland (4.5 mg), South Korea (2.7 mg), the Netherlands (2.3 mg), and Ghana (1.1 mg). This morning’s data suggests the U.S. exported 17.3 mg of denatured ethanol for use other than fuel, with the lion’s share (16.9 mg) going to Canada. Given Canada’s historical importation of ethanol for fuel use, it seems unlikely that February denatured ethanol exports to Canada were strictly for uses other than fuel. Non-beverage undenatured ethanol exports for uses other than fuel were reported at 312,336 gallons. Exports of distillers grains (or DDGS), the animal feed co-product manufactured by ethanol dry mills, totaled 612,638 metric tons (mt) in February. That marks a 1% increase over January exports. Mexico (153,414 mt), China (149,768 mt), and Canada (55,146 mt) were the leading importers. *New categories as of 1/2012 (Because 1/2012 exports were miscategorized, they are presented here using the previous categories) DDGS, Ethanol, Exports 2012-04-12T15:16:27+00:00 http://www.ethanolrfa.org/exchange/entry/response-to-fox-tampa-bay-report-on-ethanol-and-gas-prices/ http://www.ethanolrfa.org/exchange/entry/response-to-fox-tampa-bay-report-on-ethanol-and-gas-prices/ The following is a response to a FOX Tampa Bay news story that came out earlier this week. What happened to fair and balanced reporting at FOX?  Tampa residents desire the truth and facts about ethanol.  The consumer segment FOX aired March 27th entitled “The Price You Really Pay at the Pump” failed to include any facts or even interviews which countered a tortured and contrived conclusion on ethanol and the price of gasoline. Here is what FOX doesn’t want its viewers to know: 1.     A study conducted by two economists and released by the Center for Agriculture and Rural Development (CARD) found that ethanol reduced wholesale gasoline prices by an average of $0.89 per gallon in 2010.  It also found that ethanol reduced gasoline prices by an average of $0.25 or 16% over the entire decade of 2000-2010.  2.    Let’s drive that point home a little further. Using data from the Federal Highway Administration, Environmental Protection Agency, and Department of Energy, we find that the average American household consumed 900 gallons of gasoline at an average price of $2.74 per gallon in 2010. That means the average family’s annual gasoline bill was $2,470, but it would have been closer to $3,270 without the use of ethanol.  The fact that ethanol use saved the average American family more than $800 is definitely worth a FOX mention. 3.    And speaking of driving, the gas mileage reduction associated with E10, the standard ethanol blend found at most Florida gas stations, is approximately three percent.  That is a reduction equal to or less than driving on poorly inflated tires. The FOX segment also fails to mention that ethanol is a natural, high octane booster that helps keep your engine components clean and improve winterization.  In fact, as the auto industry prepares to meet new higher gas mileage requirements in 2016, they are turning to ethanol as a possible answer.  It is by design that many race cars run on E100, E85 and even E15 which consumers in Florida may soon have access to. FOX, had they chosen, could have also told the story of a fuel that is 100% homegrown and produced by 90,200 proud employees in biorefineries spread across 29 states that in turn supports over 311,000 jobs indirectly across the economy.  They could have also explained that every American President since Nixon, regardless of political party, has supported ethanol as a means to reducing this country’s dependence upon foreign oil thus strengthening our economic and national security.  In 2011, ethanol helped reduce the need for 485 million barrels of imported oil…more than we buy from Saudi Arabia in year. Next time FOX decides to do a story on ethanol, we hope they will give us a call and do justice to a true American success story, Ethanol.  Sincerely, Christina MartinExecutive Vice President Ethanol 2012-03-29T18:10:07+00:00 http://www.ethanolrfa.org/exchange/entry/missing-the-larger-point...response-to-us-inches-toward-goal-of-energy-inde/ http://www.ethanolrfa.org/exchange/entry/missing-the-larger-point...response-to-us-inches-toward-goal-of-energy-inde/ The following is a Letter to the Editor of the New York Times. Editor: Your article on the recent domestic oil and gas boom (U.S. Inches Toward Goal of Energy Independence, March 22) portrayed increased fracking and deep water drilling as the main driver of our nation’s steadily declining oil import dependence since 2005. Meanwhile, the most significant factor in our progress toward energy independence—tremendous growth in U.S. ethanol production—was given only a passing mention near the end of the article. The sustained trend toward reduced oil import dependence began in 2005, during a time of sliding domestic oil production. U.S. oil production steadily dropped from 2005 to 2008. But as a result of the recent fracking craze, domestic production has rebounded back to 2003 levels. Meanwhile, American ethanol production nearly quadrupled from 2005 to 2011. On a cumulative basis, ethanol has comprised 81 percent of the new transportation fuel volume produced in the United States since 2005. The Congressional Research Service recently wrote that ethanol is the “largest single component of the domestic supply growth” since 2005. In fact, ethanol now accounts for one out of every four gallons of domestically-produced fuel consumed by gasoline vehicles in 2011. Without ethanol, 2011 oil import dependence would have been 52 percent—rather than the actual level of 45 percent cited in the article. Today, ethanol accounts for 10 percent of the nation’s gasoline supply, displacing the need for the gasoline refined from 485 million barrels of crude oil. And with recent approval to use 15 percent ethanol blends in most vehicles, the industry stands ready to contribute even more volume to the domestic supply. In addition to reducing oil imports, ethanol—currently selling for $1/gallon less than gasoline—is lowering fuel costs and decreasing the transportation sector’s GHG emissions. National security hawks, as well as economists from Merrill Lynch, the Energy Information Administration, and several universities have recognized the substantial impact of ethanol on our nation’s oil import dependence. Why hasn’t the New York Times noticed? Bob DinneenPresident and CEOThe Renewable Fuels Association Ethanol, Renewable Fuels Standard 2012-03-29T15:51:23+00:00 http://www.ethanolrfa.org/exchange/entry/u.s.-ethanol-exports-strong-in-january-brazil-is-top-market/ http://www.ethanolrfa.org/exchange/entry/u.s.-ethanol-exports-strong-in-january-brazil-is-top-market/ Government data released today showed the U.S. exported 76.3 million gallons (mg) of ethanol (denatured and undenatured, non-beverage) in January. This marks the highest total ever for the first month of the year, which is typically a slow month for U.S. ethanol exports. January 2012 exports were 33% above January 2011 totals and nearly six times higher than January 2010. Of the total, 51.8 mg (68%) was denatured, while 24.5 mg (32%) was undenatured.   Brazil was again the top destination for U.S. exports, receiving a total of 26.4 mg. Exports to Brazil fell from previous months, due largely to that nation’s recent decision to reduce the mandatory ethanol blend level from 25% to 20%. The Brazilian state of Sao Paulo also recently re-instituted a sales tax on imported ethanol at the point of customs entry, while at the same time deferring payment of the tax for domestic-origin product. Still, exports to Brazil represented approximately one-third of total January shipments, which is consistent with the share of total exports that went to Brazil in 2011. Canada imported 23.4 mg in January, a total consistent with previous months (monthly exports to Canada averaged 24.8 mg in 2011). The Netherlands was the third-leading importer of U.S. ethanol in January, taking in 4.9 mg. Oman (4.5 mg) and Mexico (4.5 mg) rounded out the top five. Exports of distillers dried grains with solubles (DDGS) totaled 606,643 metric tons (mt), a 7% increase over December shipments and the highest since last September. Mexico was again the top market, importing 160,285 mt. China (104,427 mt), Vietnam (58,191 mt), Canada (54,634 mt), and S. Korea (40,136 mt) followed. Brazil, Ethanol, Exports 2012-03-09T15:51:15+00:00 http://www.ethanolrfa.org/exchange/entry/ethanols-role-in-reducing-gas-prices/ http://www.ethanolrfa.org/exchange/entry/ethanols-role-in-reducing-gas-prices/ Retail gasoline prices are again on the rise, recently reaching their highest level since May 2011. The national average retail price for regular grade gasoline hit $3.79/gallon last week, $0.27/gallon higher than at the same time last year and $1.04/gallon higher than the same week in 2010.[1]  Prices along the coasts are even higher, with California drivers paying an average of $4.36/gallon and New Yorkers spending $3.96/gallon for regular gasoline. As gas prices typically ramp up in April and May, many analysts are concerned that today’s high gas prices will spiral even higher in the coming months. Experts predict drivers in some parts of the country may be paying as much as $5/gallon by Memorial Day.[2] The recent run-up in fuel prices is occurring even as gasoline demand has fallen to its lowest point in more than a decade. Tensions in Iran and Syria have prompted speculative investors to raise their stakes in the oil market, which has translated to higher crude oil prices. Nearby crude oil futures hit $109.77/barrel on February 24, the highest price since early May 2011. These higher crude oil prices, along with refinery closures in the eastern United States, have sparked higher gasoline prices from coast to coast. Noted officials and economists, including Federal Reserve Chairman Ben Bernanke, have recently warned that the surge in oil and gasoline prices significantly threatens the nation’s budding economic recovery.[3] THE ROLE OF ETHANOL While recent gasoline prices have been the highest ever for this time of year, they would unquestionably be even higher without the enormous contribution of ethanol. American-produced ethanol now constitutes 10% of our nation’s gasoline supply, and it is the only energy source available today that can meaningfully keep gasoline prices in check. In a 2011 paper published by the Center for Agriculture and Rural Development (CARD), economists from Iowa State University and the University of Wisconsin found that the use of more than 13 billion gallons of ethanol reduced gasoline prices by an average of $0.89/gallon in 2010.[4] That means the average American household spent $800 less on gasoline than would have otherwise been the case without ethanol. The researchers also found that for the first decade of the 21st century, growth in ethanol production and use helped keep gasoline prices cheaper by an average of $0.25/gallon. As such, American drivers saved an average of $35 billion annually on gasoline purchases from 2000 to 2010. HOW DOES ETHANOL REDUCE GAS PRICES? Ethanol is cheaper than gasoline at the wholesale level:  A gallon of ethanol is currently selling for nearly $1 per gallon less than a gallon of gasoline.  That means a gallon of E10 (gasoline containing 10% ethanol) is $0.10/gallon cheaper than a gallon of conventional gasoline with no ethanol.  If E15 (gasoline with 15% ethanol) blends were available today, they likely would be selling at an even larger discount to conventional gasoline.[5] Increased ethanol use reduces oil demand and prices:  Since 2005, the year in which the Renewable Fuel Standard (RFS) was first enacted, America’s oil demand has decreased and national oil import dependence has fallen from 60% to 45%.  Meanwhile, ethanol has grown from 1% of the nation’s gasoline supply to 10% today.  As the world’s largest oil consumer, extending our oil supply with renewable fuels helps put downward pressure on petroleum prices and keeps them lower than they would be otherwise (this is the effect primarily responsible for the $0.89/gallon savings found by the aforementioned CARD analysis). Ethanol provides gasoline refiners with a cost-effective source of octane:  With an octane rating of 113 (RON), ethanol has considerable value to refiners as a source of octane. Oil refiners and blenders use ethanol to upgrade otherwise unmarketable lower octane sources of gasoline (called sub-octane) to the octane levels required by state law for sale into commerce. Upgrading sub-octane gasoline with ethanol reduces the refiner’s cost of producing gasoline. If low-cost ethanol were not available to refiners, octane demand would have to be met with other higher-cost sources, many of which are toxic in nature. THE BOTTOM LINE The factors driving gasoline prices higher are complex and not always transparent. However, there can be no argument that ethanol is playing a significant role in holding gasoline prices lower than they would be otherwise.  It will take a host of solutions to divorce America’s economic future from the vagaries of the world oil market, but ethanol is providing one part of the answer today and can be an even larger part of the solution in the years and decades to come.  Download the full PDF version of this analysis here. Download more charts further analyzing ethanol and gas prices here. [1] Energy Information Administration. Gasoline and Diesel Fuel Update. http://www.eia.gov/petroleum/gasdiesel/ [2] See, for example, C. Krauss. “Tensions Raise Specter of Gas at $5 a Gallon.” New York Times. Feb. 29, 2012. [3] See http://thehill.com/blogs/e2-wire/e2-wire/213375-bernanke-policymakers-have-few-short-term-options-to-lower-gas-prices [4] Available at: http://ageconsearch.umn.edu/bitstream/103916/2/11-WP_523.Du-Hayes.pdf [5] EPA approved the use of E15 in model year 2001 and newer vehicles in 2011. However, other federal and state regulatory requirements and marketplace adjustments must be achieved before E15 will be broadly available. Ethanol, Fuel 2012-03-06T16:02:53+00:00 http://www.ethanolrfa.org/exchange/entry/2011-ethanol-exports-total-1.19-billion-gallons-brazil-accounts-for-one-thi/ http://www.ethanolrfa.org/exchange/entry/2011-ethanol-exports-total-1.19-billion-gallons-brazil-accounts-for-one-thi/ The official numbers are in and they confirm what the industry has known all year: 2011 was a huge year for ethanol exports. According to government data released this morning, the year ended with record monthly ethanol exports of 172.7 million gallons (mg) in December. More than 40% of December exports went to Brazil. The wave of shipments in December took the annual total for 2011 to 1.19 billion gallons, more than triple the 2010 export total of 396 mg. Brazil was the leading importer of U.S. ethanol in 2011, receiving 33% of total shipments. Exports accounted for approximately 8.6% of U.S. ethanol production in 2011, up from 3% in 2010 and 1% in 2009. DECEMBER EXPORTS December exports of denatured ethanol totaled 136.5 mg, a new monthly record. Brazil was the top destination for denatured product in December, receiving 53.4 mg (39%). Other top importers of U.S. denatured ethanol were Canada (36.7 mg), the United Kingdom (21.8 mg), United Arab Emirates (11.8 mg) and Oman (6.6 mg). Undenatured ethanol exports tallied 36.2 mg in December. Brazil was the leading importer of undenatured ethanol, bringing in 20.3 mg (56%). The United Kingdom (4.8 mg), Netherlands (3.7 mg), Nigeria (3.2 mg), and Mexico (2.7 mg) were also top destinations. 2011 ANNUAL EXPORTS For the year, the U.S. exported 909.6 mg of denatured ethanol and 283.5 mg of undenatured (non-beverage) ethanol. Brazil was the leading importer of U.S. ethanol at 395.6 mg (which incidentally is almost identical to total U.S. exports to all nations in 2010). Of the volume shipped to Brazil, 140.9 mg (36%) was undenatured, while 254.6 mg (64%) was denatured. Canada was the second-leading importer of U.S. ethanol in 2011, taking in 297.3 mg, almost all of which was denatured. Exports to Canada accounted for 25% of total shipments in 2011. The Netherlands (124.1 mg) and United Kingdom (119.4 mg) ranked third and fourth, respectively for the year. The United Arab Emirates, an OPEC member country, ranked fifth with 64.8 mg of imports from the U.S. Distillers grains exports for 2011 totaled 7.65 million metric tons (mt), down 15% from 2010. Mexico was the top importer, receiving 1.78 million mt (23%), followed by China with 1.39 million mt (18%). Canada (737,689 mt), Vietnam (499,523 mt) and Japan (301,234 mt) rounded out the top five.     Brazil, Ethanol, Exports 2012-02-10T16:20:10+00:00 http://www.ethanolrfa.org/exchange/entry/nec-scholarship-recipient-essay-rises-above-the-rest/ http://www.ethanolrfa.org/exchange/entry/nec-scholarship-recipient-essay-rises-above-the-rest/ For the past three years, the Renewable Fuels Association (RFA) and Renewable Fuels Foundation (RFF) have held a scholarship competition for higher education students to enter for a chance to win a free registration to the annual National Ethanol Conference (NEC). Attending the conference provides the students a chance to meet and network with ethanol leaders, policy makers and industry experts to see what opportunities there are for them in the ethanol industry. The level of interest students show in attending the NEC continues to prevail year after year. Applicants were asked to explain how this scholarship will assist them in achieving their academic and/or career goals in 500 words or less. They were also asked to include two letters of recommendation, a current resume and an official school transcript. Each year, numerous students apply for this scholarship, and while all the recipients demonstrate an interest in moving forward in the industry, there are some that stand out above the rest. This year, two exemplary essays were submitted, and we would like to showcase them. You can find the other essay here. Ted Elverson is majoring in Agriculture and Biosystems Engineering at South Dakota State University.  He grew up on a farm and has strong roots in agriculture.  Ethanol is a large part of agriculture and has affected him for most of his life.  This has led him into an internship with POET and a career focus in the biofuels. “The National Ethanol Conference is a great opportunity for advancing my career in the ethanol industry.  Policy has a huge impact on the industry.  Governmental mandates and funding has been a hot topic this last year with the debt ceiling and budget reform.  I would like to learn from the industry leaders how these policies will affect the industry and what can be done to benefit the industry.  Networking with leaders and experts will allow me to make an impact within the industry as I pursue a career in ethanol. My interest in the ethanol industry stemmed from my agricultural background.  I grew up on a farm and have worked alongside my father and grandfather from childhood.  We invested in an ethanol plant, Dakota Ethanol in Wentworth, South Dakota who is attending the conference, and have hauled corn there for years. I am in the Agricultural and Biosystems Engineering program at South Dakota State University.  Within my major, I am pursuing an emphasis in Biomaterials Processing.  This emphasis focuses on ethanol and bio-fuel production.  My curriculum pertains to the production of ethanol.  I took the Principles of Biomaterial Processing course offered by the department last fall.  In the lab, we compared different properties of biological materials which are applicable to the preparation of feedstock to be used to create ethanol.  The Agricultural and Biosystems Engineering department is very supportive and has offered to pay for airfare to get to the conference. Last summer I was an engineering intern at POET.  I worked in the corporate office under the Plant Management division and was introduced to the ethanol production process.  I was able to spend time at plants and become familiar with different processes.  I worked with improving plant efficiency and troubleshooting issues.  During the internship, I was exposed to the advantages of bio-fuels and the opposition the ethanol industry faces. I want to be a part of the future of ethanol.  The ethanol industry has become a viable industry and I would like to see it expand.  It has established itself as a real alternative to fossil fuels.  Lately, it has become a target with opposition from the food, petroleum and environmental interests.  I recently attended a presentation from the Department of the Navy which has committed to convert half of its energy to bio-fuel.  This support is something that needs to be common throughout the United States to lower our dependence on foreign energy.  I would hope to hear more on the legislation and regulation which may shape the industry in the future.  With this knowledge, I could begin to support bio-fuels through local, state and federal representatives. This conference would be a great opportunity for me to meet industry leaders and hear from some of the best experts in the bio-fuel industry.  The networking opportunities presents an opportunity to learn what other companies and plants are exploring across the country.  The experience would increase my knowledge and possibly introduce some new or developing processes to strengthen the industry.” Education, National Ethanol Conference 2012-02-03T15:10:02+00:00 http://www.ethanolrfa.org/exchange/entry/outstanding-essay-from-nec-scholarship-recipient/ http://www.ethanolrfa.org/exchange/entry/outstanding-essay-from-nec-scholarship-recipient/ The Renewable Fuels Association (RFA) and Renewable Fuels Foundation (RFF) believe it is important for students interested in the biofuels and renewable fuels industry to have an opportunity to explore what the industry has to offer them by meeting with and talking to experts and industry leaders at the National Ethanol Conference. For the third consecutive year, the RFA and RFF offered scholarships to students in higher education for a chance to receive a complementary registration at the 17th Annual National Ethanol Conference. Applicants were asked to explain how this scholarship will assist them in achieving their academic and/or career goals in 500 words or less. They were also asked to include two letters of recommendation, a current resume and an official school transcript. Each year, numerous students apply for this scholarship, and while all the recipients demonstrate an interest in moving forward in the industry, there are some that truly stand out. Below is one that stood out above the rest this year. You can find the other outstanding essay here. Karen Lewis is from a fifth generation family farm in Michigan that was settled in 1876.  She is currently a Ph.D. student at Arizona State University in the Morrison School of Agribusiness and Resource Management. Her research area of interest is agricultural policy analysis.   “The National Ethanol Conference Scholarship will assist me in achieving my academic and career goals. I am currently a PhD student at Arizona State University (ASU) in the Morrison School of Agribusiness and Resource Management where I research agricultural policy. Attending the National Ethanol Conference will update my understanding of the current direction of ethanol policy and help my research endeavors at ASU. While my future career is still uncertain, my options include becoming a university professor, being an agricultural advocate, working for the government or working for an agribusiness industry. Therefore, the National Ethanol Conference will assist me in gaining insight into both my educational aspirations and my future career path. In addition to studying agricultural policy at ASU, I also researched ethanol production while I was a Graduate Research Assistant at Michigan State University (MSU). I received my Master’s Degree from MSU in 2010 from the Department of Agriculture, Food and Resource Economics. While at MSU I researched ethanol production and its impact on corn markets in the Midwestern United States. My Master’s Thesis was titled, “The Impact of Ethanol on Corn Market Relationships and Corn Price Basis Levels.” From my Master’s Thesis, I published an article, titled "The Impact of Ethanol Production on Spatial Grain Market,” in the peer-reviewed academic journal titled the International Food and Agribusiness Management Review, Volume 14, Issue 4. A second article from my Master’s Thesis is currently under review at a peer-reviewed academic journal. I am the lead author for both journal articles and my MSU major professor, Dr. Glynn Tonsor, is my co-author. Attending the National Ethanol Conference is also of interest to me because I grew up on a fifth generation family farm in Michigan which was settled in 1876. On our family farm we grow corn, sugarbeets, wheat and soybeans on 1,100 acres of land. On our farm we also feed 700 head of beef cattle, and a primary feed input for our cattle are distiller’s grains that come from the ethanol plant located in Marysville, Michigan. Learning about the direction of future ethanol production and policy at the National Ethanol Conference is of great interest to me because I have previous experience with federal level legislation. During the summer of 2007 I was an intern for the American Sugarbeet Growers Association (ASGA) when the 2008 Farm Bill was being considered and passed by the United States House of Representatives. Headquartered in Washington, D.C., the ASGA is a lobbyist organization that represents all of the sugarbeet growers in the U.S. I would be grateful for the opportunity to see how the Ethanol Industry plans to shape future ethanol policy at the National Ethanol Conference. Attending the National Ethanol Conference would be an excellent and valuable addition to my educational and life experiences concerning ethanol production. Networking at the National Ethanol Conference will not only assist my educational goals, but it will also be beneficial to my future career in the agribusiness field.” Education, National Ethanol Conference 2012-02-03T15:06:53+00:00 http://www.ethanolrfa.org/exchange/entry/another-record-breaking-month-for-ethanol-exports/ http://www.ethanolrfa.org/exchange/entry/another-record-breaking-month-for-ethanol-exports/ U.S. exports of denatured and undenatured (non-beverage) ethanol set a new monthly record of 152.5 million gallons (mg) in November, according to government data released this morning. Brazil was the leading destination for U.S. product and accounted for nearly half of total shipments for the month. Year-to-date total exports through November stood at 1.02 billion gallons (bg), meaning exports were on pace for a 2011 calendar year total of 1.11 bg. Notably, these exports did not qualify for the ethanol blender’s tax credit, as the ethanol was not blended with gasoline prior to exportation. Denatured ethanol exports totaled 115.4 mg in November, eclipsing the previous monthly record of 104.6 mg set in July. Brazil was the leading destination with 45 mg of imports. Canada followed with 27 mg of imports. Notably, India tallied its first major shipment of U.S. ethanol for the year, bringing in 10 mg of denatured product. Undenatured (non-beverage) ethanol exports registered at 37.1 mg in November, edging out October’s total of 36.9 mg to establish a new monthly record. Most of the November undenatured shipments (72%) went to Brazil, as that nation took in some 27 mg. Jamaica, Mexico, and the Netherlands were among other top destinations. Data for November U.S. ethanol imports were not yet available, but anecdotal evidence suggests the “Ethanol Shuffle” continued in November. November exports of distillers dried grains with solubles (DDGS) totaled 538,174 metric tons (mt), the lowest monthly tally of the year. China was the top market (140,741 mt), followed by Mexico (117,108 mt), and Canada (53,458 mt). Year-to-date exports of DDGS stood at 7.08 million mt, meaning exports are on pace for 7.72 million mt for the calendar year. That total would be down 14% from 2010’s record exports of 9.03 million mt.   Ethanol, Exports 2012-01-13T15:07:55+00:00 http://www.ethanolrfa.org/exchange/entry/ethanol-remains-a-bargain/ http://www.ethanolrfa.org/exchange/entry/ethanol-remains-a-bargain/ The end of the Volumetric Ethanol Excise Tax Credit (VEETC) was a non-event for America’s ethanol industry.  Domestic ethanol producers and marketers had long been preparing for the end of this tax incentive that in today’s market is no longer as necessary as it once was. Unfortunately, the same kind of misinformation and uninformed bloviating that characterized opposition to the tax incentive is coming to dominate discussions about what the end of VEETC truly means.  In recent weeks, many headlines have trumpeted the argument that gas prices will be higher as a result of expiration of the VEETC. As is often the case, a quick review of the facts tells the story. The VEETC was an incentive for blenders of ethanol into gasoline.  It allowed these companies to take a $0.45 tax credit for each gallon of ethanol they blended.  Each gallon of gasoline these companies produce is subject to an 18.4 cent federal excise tax against which they could apply VEETC.  As such, an ethanol blender benefited from a 4.5 cent tax reduction for each gallon of E10 sold, effectively lowering the tax on gasoline producers and consumers.  When the tax credit still existed, some critics argued that the 4.5 cent benefit was kept in the pocket of the blender and not allowed to trickle downstream to consumers at the pump; ironically, some of those same critics are now saying expiration of the tax credit will directly lead to a 4.5-cent increase in pump prices for consumers. In any case, with VEETC gone, taxes on blends of ethanol across the board have gone up and gasoline blenders and oil companies will likely pass the increased tax burden on to consumers at the pump. Critics of ethanol and reporters unfamiliar with how gasoline is priced have been quick to jump on this and point the finger of blame at ethanol for raising gas prices.  While taxes on ethanol blends have been raised, ethanol remains at a significant discount to gasoline. As the chart below shows, ethanol has traded at an average discount to gasoline of 25 cents per gallon at the wholesale level for the past four years.  At times, such as the spring of 2010, ethanol has been close to $1/gallon cheaper than gasoline. In recent weeks, ethanol prices have been 60 cents per gallon lower than gasoline. As such, E10 ethanol blends have been 6 cents per gallon cheaper than old-fashioned 100% gasoline—even without the tax credit.     Additionally, ethanol’s ability to significantly extend oil supplies exerts downward pressure on oil and gasoline prices.  Fully 10% of America’s gasoline supply is now coming from a less expensive, domestic source that is beyond the reach of Mahmoud Ahmadinejad and other tyrannical petro-dictators, meaning oil and gasoline prices are being kept in check by ethanol.  A study by noted economists from Iowa State University and the University of Wisconsin concluded that ethanol’s presence in the market in 2010 lowered gasoline prices by $0.89 per gallon from where they would have been and an average of $0.25 per gallon in the past decade.  Moreover, the study found that removing ethanol would likely result in a 41-92% increase in the price of gasoline.  That means if consumers woke up tomorrow morning and ethanol was gone—which is precisely the aim of some of the industry’s critics—gas prices would rise to $5-$6.75 per gallon. Ouch. VEETC was a highly successful initiative that accomplished what all subsidies and incentives should:  help build an industry, get it to stand on its own two feet, and then expire.   This model stands in stark contrast to the hundreds of billions of dollars in direct, indirect, and hidden support the oil industry receives courtesy of the American tax payer that keep us addict to foreign oil and disguise the true cost of that addiction. In fact, a recent report from a Yale University economist and DBL Investors shows that subsidies for oil & gas averaged $4.86 billion per year from 1918 to 2009—that’s a total of nearly $450 billion! In contrast, the authors say biofuels subsidies—which are now gone—averaged $1.08 billion from 1980 to 2009 for a total of about $31 billion.   Remember, every time you pull up to the pump, you are most likely filling up with 10 percent ethanol.  Keep in mind the domestic ethanol you are using is likely cheaper than the gasoline in the gallon and does not require the protection of America’s 5th Naval Fleet to make it to the pump. Ethanol, VEETC 2012-01-10T22:06:23+00:00 http://www.ethanolrfa.org/exchange/entry/understanding-california-court-decision-and-the-lcfs/ http://www.ethanolrfa.org/exchange/entry/understanding-california-court-decision-and-the-lcfs/ On Thursday, December 29, 2011, Judge Lawrence D. O’Neill of the U.S. District Court for the Eastern District of California issued a decision finding that California’s Low Carbon Fuel Standard (LCFS) is unconstitutional on the grounds it violates the Commerce Clause of the United States Constitution.  According to press accounts, California’s Air Resources Board (CARB) will immediately appeal the decision to the U.S. Court of Appeals for the 9th Circuit and intends to seek a stay of the ruling to allow CARB to continue implementing the LCFS. To date, CARB has not filed its appeal. Background: On December 24, 2009, the RFA, together with other plaintiffs including Growth Energy, filed for Summary Judgment and Preliminary Injunction against the LCFS in U.S. District Court for the Eastern District of California.  The RFA argued the LCFS was unconstitutional and unlawful on four points: The LCFS discriminates against interstate commerce in ethanol because it assigns worse carbon-intensity scores to Midwest ethanol than to California ethanol (in part because Midwest ethanol has to be shipped to California and because CARB assumed Midwest ethanol would be produced with electricity generated by burning coal); That the LCFS attempts to regulate conduct occurring wholly outside the borders of the state of California and is thus impermissibly extraterritorial; That the benefits of the LCFS are nil and thus outweighed by their substantial burdens; That the LCFS impermissibly interferes with federal laws protecting the domestic corn ethanol industry. The Ruling: Judge O’Neill ruled that the LCFS unlawfully sought to regulate commerce occurring outside the state and discriminated against Midwestern ethanol.  Judge O’Neill specifically noted that CARB “cannot take ‘legal and political responsibility’ of commerce occurring outside of California, even if the products of that commerce ultimately are sold in California.” Based on his ruling, Judge O’Neill issued a preliminary injunction against further implementation of the LCFS until the litigation is completed.  Judge O’Neill wrote: “[Because the RFA] established a likelihood of success on the merits of [its] Commerce Clause claim, and raise[d] serious questions related to [its] preemption claim, likelihood of irreparable harm, and the balance of the equities so tips in their favor, this Court GRANTS the ... preliminary injunction motion and ENJOINS enforcement of the LCFS during the pendency of this litigation.” Frequently Asked Questions:  What does this ruling mean?  This is a significant ruling in favor of American ethanol producers.  It upholds the claims made by RFA that CARB had unlawfully sought to regulate the way in which businesses not based in California operate and penalized ethanol by imposing significant carbon penalties based upon commerce occurring outside the state of California.  As a result, CARB must halt implementation of the LCFS.  The RFA has worked tirelessly with CARB to point out the inherent overreach and discrimination in the LCFS and the flawed scientific theory on which the discrimination is based.  To date, CARB has not shown a willingness to address all the issues raised by the RFA and thus made this lawsuit and this ruling necessary and unavoidable. Why does it matter?  California is the single largest market for U.S. ethanol at nearly 1.5 billion gallons a year.  As it was being implemented, the LCFS would eventually exclude grain-based ethanol from most ethanol producers outside the state of California.  In addition, the unsubstantiated carbon accounting schemes employed by CARB would have encouraged the import of Brazilian ethanol at the expense of U.S. produced ethanol from all feedstocks.  This perversion would have both made the U.S. more dependent on imported oil and resulted in an increase in the carbon emissions CARB was trying to reduce as U.S. ethanol would be exported to Brazil to fill the void being created by Brazilian imports to California.  What are the next steps?  CARB has stated that it plans to appeal the decision.  The RFA will monitor CARB’s action and act accordingly to defend the result achieved at the District Court level.  CARB’s actions and the ruling on the appeal will determine if additional action will occur.  What is the end game for this litigation?  The RFA is hopeful the decision by Judge O’Neill will be upheld and the LCFS will continue to be stopped.  It unlawfully regulates out of state activities and discriminates against ethanol on a geographic basis and would close off the largest market for U.S. ethanol (the state of California) for virtually all grain-based ethanol producers.  The RFA is not opposed to carbon-reducing programs but believes any such initiative should be undertaken at the national level, thus avoiding a state-by-state patchwork of unworkable and possibly unconstitutional policies.  If based on the best available science and grounded in real world perception, a national low carbon fuel strategy that complements the Renewable Fuel Standard would be something the RFA and its members would support. Brazil, Ethanol, Land Use 2012-01-04T22:16:18+00:00 http://www.ethanolrfa.org/exchange/entry/the-2012-crystal-ball/ http://www.ethanolrfa.org/exchange/entry/the-2012-crystal-ball/ As we noted before Christmas, 2011 was an exciting year for American ethanol production.  Evolutions in the marketplace, advancements in technology, and progress in policy have all set the stage for a new era in American ethanol production.  Gone is the tax incentive that helped build the industry and then was allowed to expire after it had served its purpose.  Also gone is the tariff on imported ethanol.  Still in place, however, are the Renewable Fuel Standard (RFS) and a marketplace that is now comprised of 10 percent ethanol and growing.  With this backdrop, here are five stories to watch for in 2012, in the humble opinion of the RFA: 1.       First commercial availability of E15 blends for MY2001 and newer vehicles.  The RFA is working very hard to finalize federal requirements to certify E15 blends.  Once completed, getting E15 blends into the marketplace becomes a state-by-state march, with some states like Iowa and Illinois ready to go as soon as the federal requirements are completed.  When E15 gallons are first legally available is still up in the air, but we are betting it happens in the first half of 2012. 2.       Free and fair trade of ethanol.  In addition to being the world’s largest producer, consumer, and exporter of ethanol, American ethanol producers are also the lowest cost producer.  With this emergence, new challenges from ethanol interests in other nations have arisen.  Whether it is the European Union anti-dumping investigation or the vacillating ethanol policies in Brazil, a fair resolution to trade challenges will be important to the continued growth and evolution of domestic ethanol production. 3.       “You want the truth?  You can’t handle the truth!”  The upcoming year promises to see a great deal of legal activity surrounding American ethanol use.  The recent ruling by a federal judge that California’s Low Carbon Fuel Standard (LCFS) is unconstitutional will be appealed.  And, arguments in the oil/food processing/environmental lobbying industry lawsuit against EPA’s approval of E15 have yet to be heard.  All of this, as well as international litigation, promises to keep legal beagles busy in the year and years to come. 4.       Wave on wave of RFS challenges.  The conventional wisdom is Congress will accomplish even less in 2012 than it did last year – with it being an election year and all.  While this may prove to be true, it will not stop those who oppose American renewable fuels from seeking to dismantle the RFS.  We expect the barrage of unsubstantiated attacks on the RFS to continue and even intensify as the tax credit that long served as the boogeyman for anti-ethanol interests has expired. 5.       Answering cellulosic ethanol challengers.  Construction is slated to begin on commercial scale cellulosic ethanol biorefineries with production to follow in early 2013.  These facilities would be the first commercial-scale project of their kind in the world.  In order to assure these efforts are successful, Congress must renew key tax provisions for cellulosic ethanol producers before they expire at year’s end.  The RFA, and its partner organization, the Advanced Ethanol Council, will make extending these policies a top legislative priority.    Obviously, there are a host of issues with regard to America’s ethanol and energy sector that will deserve our attention.  Eliminating unnecessary subsidies for the petroleum industry and accurately accounting for carbon emissions from transportation fuels are good examples.  But we believe these five storylines will have the most lasting impact on ethanol production in the U.S. E15, Engines, Ethanol, Exports, Land Use, Production 2012-01-03T18:56:23+00:00 http://www.ethanolrfa.org/exchange/entry/top-5-ethanol-stories-for-2011/ http://www.ethanolrfa.org/exchange/entry/top-5-ethanol-stories-for-2011/ America’s ethanol industry has been in a state of rapid evolution since the beginning of 2000.  Record-setting production, policy development, and market expansion have all moved forward with dramatic speed and helped to create the world’s largest, most efficient, most cost effective renewable fuels industry. However, developments in 2011 have set the stage for a new chapter in American ethanol history.  Here are the Top 5 stories of 2011 as seen through the eyes of the Renewable Fuels Association. 1.        EPA gives final approval to E15 for MY2001 and newer vehicles.  For the first time ever, Americans driving conventional vehicles will be provided the opportunity to choose ethanol blends in excess of 10 percent.  While a strong argument could be made for the end of the tax incentive as the year’s top story, the impact of an expanded market through E15 blends will have an exponentially greater impact on the U.S. ethanol market than the temporary adjustment caused by the end of VEETC.  2.       End of VEETC and the secondary tariff.  Without protest, U.S. ethanol producers allowed the $0.45 per gallon tax incentive for ethanol blending to expire.  The offsetting secondary tariff on imported ethanol will also expire.  The domestic ethanol industry has evolved, policy has progressed, and the market has changed making now the right time for the incentive to expire.  Ethanol producers never intended for the tax incentive to be permanent.  Like all incentives, it was put in place to help build an industry and when successful, it should sunset.  Unfortunately, the same mentality does not extend to century-old tax subsidies supporting 20th century petroleum technologies. 3.       U.S. exports set all-time highs.  As the U.S. worked to move beyond artificial barriers in the domestic market, new international markets emerged as opportunities for domestic ethanol producers.  An estimated one billion gallons of denatured and undenatured ethanol – gallons never blended with gasoline or eligible for the tax incentive – were exported in 2011.  Additionally, U.S. exports of ethanol feed co-products, largely distillers grains, also surged.  An estimated 8-9 million metric tons of this high value livestock feed was exported in 2011. 4.       Restarting the advanced and cellulosic ethanol engine.  Weathering the economic collapse of 2008, advanced and cellulosic ethanol producers made big strides in 2011 to bring these promising technologies to commercial production.  A number of advanced and cellulosic ethanol companies, including Abengoa, Coskata, and Mascoma are beginning construction on ethanol biorefineries that will expand America’s ability to fuel its economy with a broader range of renewable feedstocks.  (An RFA side note:  The formation of the Advanced Ethanol Council in partnership with the RFA was a pivotal step forward in forcefully and effectively advocating for the accelerated commercialization of advanced and cellulosic ethanol technologies.) 5.       Emergence of the integrated biorefinery model.  Ethanol production is far more than fuel and feed.  Today, approximately 40 percent of all ethanol facilities are capturing and selling corn oil.  An ever-increasing number of ethanol producers are also deploying technologies to produce proteins, biochemicals and other co-products that can further displace oil in marketplace.  Anything made from oil can be made from biomass.  It is matter of know-how and American ethanol producers are proving that it can be done and be done at scale. It is these five developments that defined 2011 and are setting the stage for 2012 and beyond.  In the first week of January, the RFA will be publishing a companion piece to this that looks at the Top 5 stories to watch for U.S. ethanol in 2012. Until then, Happy Holidays from the dedicated staff of the Renewable Fuels Association! DDGS, E15, Ethanol, Energy, Exports, Fuel 2011-12-21T22:15:30+00:00 http://www.ethanolrfa.org/exchange/entry/ethanol-growth-not-leading-to-cropland-expansion-new-usda-report-shows/ http://www.ethanolrfa.org/exchange/entry/ethanol-growth-not-leading-to-cropland-expansion-new-usda-report-shows/ An in-depth analysis of U.S. land use patterns released today by the U.S. Department of Agriculture shows total cropland decreased by 34 million acres from 2002 to 2007, the lowest level since USDA began collecting this data 1945. The USDA report also shows significant increases in forestland, grassland and rangeland during the five-year period. The Renewable Fuels Association (RFA) said the new report is one more addition to the mounting body of evidence that proves increased ethanol production has not resulted in expansion of total U.S. cropland or a decline in grassland and forest. Using real data from the real world, this report from USDA shows yet again that U.S. cropland is not expanding in response to increased ethanol demand. The report also shows that forest and grassland increased dramatically during a period when ethanol production more than tripled. This is more proof that the wild predictions of ethanol causing cropland expansion and conversion of forest and grassland are just plain wrong. Meanwhile, the report shows land dedicated to urban areas and special-use areas (roads, industrial areas, rural residences, etc.) increased dramatically. It is ironic that the land use debate has fixated on biofuels, when the actual culprit of land conversion has clearly been urban and suburban sprawl. Subdivisions full of mini-mansions, big box stores, shopping malls, and parking lots are encroaching on productive farmland across the country. According to the authors, “Urban land acreage quadrupled from 1945 to 2007, increasing at about twice the rate of population growth over this period. Land in urban areas was estimated at 61 million acres in 2007, up almost 2 percent since 2002 and 17 percent since 1990 (after adjusting the 1990 estimate for the new criteria used in the 2000 Census).” The estimated acreage of grassland pasture and range increased by 27 million acres (almost 5 percent) between 2002 and 2007, while forest-use land increased 20 million acres (3 percent) from 2002 to 2007, “continuing a trend that became evident in 2002 and reversing an almost 50-year downward trend.” RFA encourages the policymakers and regulators responsible for penalizing crop-based biofuels for indirect land use change to take a close look at the new USDA report. There is simply no substitute for real data. Our renewable energy policies and regulations should be based on what is actually happening on the ground, not on hypothetical results from black box economic models. The USDA report is available here.   *Special-use areas include highways, railroads, airports, defense, industrial, parks and other land uses. Agriculture, Land Use, Research, USDA 2011-12-21T21:06:37+00:00 http://www.ethanolrfa.org/exchange/entry/the-ethanol-shuffle/ http://www.ethanolrfa.org/exchange/entry/the-ethanol-shuffle/ There’s a hot new craze called the “Ethanol Shuffle” that’s sweeping seaports from Sao Paulo to Los Angeles and Houston to Maceio. It’s not a new dance for longshoremen and ship captains; no, this is a shuffle of an entirely different sort. This shuffle is all about the confounded realignment of the global ethanol trade. The rearrangement is occurring exclusively as the result of state and Federal fuel regulations that treat Brazilian sugarcane ethanol as if it were the Holy Grail of biofuels. Both the California Air Resources Board (CARB) and U.S. EPA have decided that producing sugarcane ethanol results in fewer lifecycle greenhouse gas emissions than producing corn ethanol. They’ve bought into the hype that sugarcane ethanol is somehow better and cleaner than corn ethanol, and they’ve used questionable analyses to support their positions. For example, EPA’s land use change analysis for the Renewable Fuel Standard (RFS2) mysteriously concluded that sugarcane ethanol expansion won’t induce any land use change emissions in Brazil, despite the fact that sugarcane acreage there has doubled in the past decade (an issue we discussed in detail here). Meanwhile, EPA’s analysis suggested about two-thirds of the land use change emissions hypothetically resulting from U.S. corn ethanol expansion come from land conversions in Brazil. Go figure. CARB’s analysis of sugarcane ethanol is full of similarly questionable assumptions. For instance, CARB allows Brazilian ethanol producers to claim that their sugarcane was mechanically harvested, when much of the sugarcane crop is still manually harvested after burning the field (a practice that releases significant GHG emissions). CARB also assumes sugarcane ethanol is transported from remote sugar mills to export terminals exclusively by rail and pipeline, when everyone knows trucks carry the majority of cane ethanol to market (this is important because emissions from transportation of the fuel are included in the overall carbon footprint, and shipping ethanol by rail and pipeline emits far fewer GHGs than shipping it by truck). So, under CARB’s Low Carbon Fuels Standard (LCFS), sugarcane ethanol generates far more credits for compliance than corn ethanol. And EPA considers sugarcane ethanol to be an “advanced biofuel,” meaning it is one of only two options available to obligated parties today for compliance with the RFS2 advanced biofuels requirement (biodiesel being the other). In short, the LCFS and RFS2 strongly compel regulated parties (typically oil refiners) to import sugarcane ethanol to meet their regulatory obligations. But here’s the rub: sugarcane ethanol is in short supply after consecutive disappointing sugar crops in Brazil. Sugarcane yields in 2011 were about 19% below the 30-year trend and on par with average yields from the mid-1980s. USDA’s attaché on the ground in Brazil estimates the country will produce just 5.8 billion gallons of ethanol in 2011/12, down 20% from last year’s 7.2 billion gallons. The shortage of sugar resulting from three consecutive years of declining cane yields means Brazil’s ethanol output hasn’t been able to keep up with domestic demand—let alone demand from traditional cane ethanol importers like the European Union. In fact, Brazil cut its mandatory nationwide ethanol inclusion level from a 25% blend to 20% because the domestic supply just isn’t there and sugarcane ethanol prices have been sky-high. Certainly, the subtext of Brazil’s cut to its blend rate is that they simply don’t want to dramatically increase imports of U.S. ethanol—apparently, they’d rather import (lots) more gasoline. Given the sugar/ethanol shortage situation in Brazil, one wouldn’t expect to see the country exporting much—if any—sugarcane ethanol to the U.S., right? They need to keep every drop for themselves, right?  Wrong…the U.S. imported nearly 40 million gallons of sugarcane ethanol for fuel use from Brazil from July through October, with much of the product coming in through the ports of Los Angeles and San Francisco. The volumes were imported strictly for compliance with RFS2 Advanced Biofuel standard and the California LCFS, as there would be absolutely no economic reason to import sugarcane ethanol otherwise. Meanwhile, the U.S. exported 123 million gallons of corn ethanol to Brazil during the same four months to offset the volumes they sent to us and to meet additional demand resulting from their shortage situation. So, that’s how the “Ethanol Shuffle” works. California imports sugarcane ethanol from Brazil rather than corn ethanol from Nebraska or Kansas; and in turn, corn ethanol from the Midwest travels to Houston or Galveston via rail, then is shipped to Brazil via tanker to “backfill” the volumes they sent to the U.S. Picture the irony of a tanker full of U.S. corn ethanol bound for Brazil passing a tanker full of cane ethanol bound for Los Angeles or Miami along a Caribbean shipping route. Remember, this is all being done in the name of reducing GHG emissions. But what are the real GHG implications of the shuffle? And what are the economic impacts? Fuel Prices Despite the ridiculously misleading claims of the Brazilian sugar industry (and most recently the Brazil-U.S. Business Council), Brazilian sugarcane ethanol has been far more expensive than U.S. corn ethanol over the past two years. According to the California Energy Commission (CEC), Brazilian sugarcane ethanol was, on average, $1.56/gallon more expensive than corn ethanol delivered from the Midwest through the first eight months of 2011 and $1.04/gallon more expensive in 2010 (see slide 13). In April, Brazilian ethanol was running $3/gallon higher than U.S. corn ethanol even before transportation costs are factored in! The CEC data means E10 made with imported Brazilian ethanol would theoretically be nearly 16 cents/gallon more expensive on average in California than E10 made with ethanol from the Midwest. In other words, a one-day supply of E10 made from Brazilian sugarcane ethanol would cost the state’s drivers $5.8 million more than the same amount of E10 made from Midwest corn ethanol (the state burns through about 38 million gallons of E10 per day). Looked at another way, the average California household would spend about $130 more on gasoline over the course of a year if that gasoline was E10 made with sugarcane ethanol rather than U.S. corn ethanol. Yet, the Brazil-U.S. Business Council furtively says importing more cane ethanol would somehow result in “…increased savings at the gas pump for U.S. drivers.” Hmmm, how does that work? As a result of tightening annual LCFS carbon intensity targets, CARB expects much less corn ethanol will be used in California in coming years and substantially more cane ethanol will be imported. If the current pricing differential between U.S. ethanol and Brazilian ethanol continues (or widens), the cost to California drivers of the transition to cane ethanol could be tremendous. GHG Emissions Some in California may argue that the GHG reductions associated with using more cane ethanol in the state would justify the incremental cost to consumers. Of course this argument ignores the fact that GHG emissions are global in nature; that is, the net impact to atmospheric CO2 levels is really no different whether the sugarcane ethanol is used in L.A. or in Rio de Janeiro. In fact, using the sugarcane ethanol in L.A. instead of in Rio is actually worse for the climate because of the additional emissions associated with transporting the product from Brazil to California and backfilling the volume with U.S. corn ethanol. Using CARB’s own transportation distances and emissions factors, we looked at the emissions impacts of two scenarios: one in which California demand is met with corn ethanol from Nebraska and Brazilian demand is met with Brazilian sugarcane ethanol (Scenario A), and one in which California demand is satisfied with Brazilian ethanol and Brazilian demand is met with U.S. ethanol (Scenario B). We find that transportation-related GHG emissions more than double in the scenario where California imports Brazilian cane ethanol and Brazil “backfills” with U.S. corn ethanol imports (Scenario B). And the miles traveled in Scenario B are more than eight times the miles traveled in Scenario A. (Note: Again, CARB curiously assumes cane ethanol travels only by rail (50%) and pipeline (50%) inside of Brazil. While we disagree with this assumption, we’ve adopted it here for the ease of comparison.) Scenario A: Rational Market   Miles CO2e emissions (g/megajoule) California demand met with corn ethanol from central Nebraska  Rail (NE ethanol plant to CA terminal) 1,350 1.96 Truck (Distribution from CA terminal)      50 0.40 Subtotal 1,400 2.36       Brazil demand met with sugarcane ethanol from Center-South, Brazil     Pipeline (50% of ethanol from sugar mill to terminal) [500 x .5 = 250] 250 0.22 Rail (50% of ethanol from sugar mill to terminal) [500 x .5 = 250] 250 0.36 Truck (Distribution from terminal)   50 0.40 Subtotal 550 0.99       Grand Total Scenario A 1,950 3.35       Scenario B: “LCFS Shuffling”       Miles CO2e emissions (g/megajoule) California demand met with sugarcane ethanol from Center-South, Brazil Pipeline (50% of ethanol from mill to port terminal) [500 x .5 = 250] 250 0.22 Rail (50% of ethanol from sugar mill to port terminal) [500 x .5 = 250] 250 0.36 Ocean Tanker (Port Santos to Port of Los Angeles)* 8,420 2.03 Truck (Distribution from port) 150 1.21 Subtotal 9,070 3.82       Brazil demand met with corn ethanol from central Nebraska     Rail (NE ethanol plant to port of Houston) 880 1.28 Ocean Tanker (Port of Houston to Port Santos)* 6,280 1.51 Truck (Distribution from port) 150 1.21 Subtotal 7,310 4.00       Grand Total Scenario B 16,380 7.82 *distances from http://www.portworld.com/map/ Now, we’re not afraid of free and fair trade or a little competition. And this whole thing might not be such a big deal if Brazil’s cane ethanol supply was increasing in balance with demand and if cane ethanol prices were closer to corn ethanol. But that’s not the case. Brazil’s domestic demand is outstripping an already short supply and the RFS2 and LCFS are just exacerbating pressure. So, while U.S. Federal and state fuels policies continue to roll out the red carpet for Brazilian imports based on subjective and unsettled lifecycle GHG analyses, the Brazilians discretely erect trade barriers to U.S. ethanol—even though they desperately need the product! This dichotomy was the subject of a letter RFA sent to the Brazil-U.S. Business Council earlier this week in response to the egregious claims in the council’s Nov. 30 letter, referenced earlier. Check out the RFA letter here. And in the meantime, put on your shufflin’ shoes! Brazil, Engines, Ethanol, Exports 2011-12-12T14:38:01+00:00 http://www.ethanolrfa.org/exchange/entry/october-ethanol-exports-just-short-of-monthly-record/ http://www.ethanolrfa.org/exchange/entry/october-ethanol-exports-just-short-of-monthly-record/ U.S. exports of denatured and undenatured (non-beverage) ethanol totaled 121.4 million gallons (mg) in October, just shy of the record of 127.4 mg established in June, according to government data released this morning. Brazil was the leading destination for U.S. exports, receiving a total of 50 mg. Canada and the EU continued to be other top export markets. Through the first 10 months of 2011, U.S. exports stood at 867.9 mg, more than double the 2010 export total. The U.S. is on pace to export more than 1 billion gallons in the calendar year.  October exports included 84.5 mg of denatured product and 36.9 mg (a new monthly record) of undenatured ethanol. Canada was the top importer of denatured ethanol in October, taking in some 22.9 mg. Brazil followed closely with 22.4 mg, while the Netherlands (16.9 mg), United Kingdom (11.0 mg) and Finland (5.0 mg) rounded out the top five. Year-to-date, Canada has been the leading importer with 233.4 mg, followed by Brazil with 156.3 mg. As for undenatured ethanol, Brazil received the lion’s share of exported product in October, bringing in 25.6 mg. The Philippines (4.3 mg), the Netherlands (2.4 mg), Nigeria (2.2 mg), and Mexico (2.0 mg) were other top destinations. On a year-to-date basis, Brazil has been the top importer of undenatured ethanol, receiving 93.7 mg. Meanwhile, the U.S. imported 13.1 mg of ethanol for fuel use from Brazil in October, presumably for compliance with the Renewable Fuel Standard’s (RFS) advanced biofuel requirement and California’s Low Carbon Fuel Standard (LCFS). Imports of sugarcane ethanol from Brazil have picked up significantly in recent months at the same time U.S. exports of corn ethanol to Brazil have grown. This “shuffling effect” is the subject of an extensive analysis and blog post the RFA will be releasing early next week. Ethanol 2011-12-09T18:03:02+00:00 http://www.ethanolrfa.org/exchange/entry/ethanol-exports-surge-in-september-while-distillers-grains-exports-slide/ http://www.ethanolrfa.org/exchange/entry/ethanol-exports-surge-in-september-while-distillers-grains-exports-slide/ Ethanol exports rebounded sharply in September, as shipments to Brazil hit their highest level since April. According to U.S. government data released today, a total of 105.8 million gallons (mg) of denatured and undenatured (non-beverage) ethanol were exported in September, with nearly half of the shipments going to Brazil. September exports were the third highest on record. Year-to-date exports stood at 746.5 mg at the end of September, almost double the amount exported in the entire 2010 calendar year. The U.S. remains on pace to export between 900 mg and 1 billion gallons in 2011. Denatured ethanol exports totaled 74.1 mg for the month, with Brazil receiving 31.1 mg. Canada (28.9 mg) followed closely, while the United Kingdom (5.2 mg), Jamaica (4.0 mg) and the Netherlands (3.2 mg) were other top destinations for denatured product in September. On a year-to-date basis, denatured ethanol exports stand at 573 mg, or about 77 percent of total shipments. As for undenatured ethanol, total exports amounted to 31.8 mg in September, the highest monthly total of the year. Brazil was the leading destination, taking in 15.8 mg. Finland (4.6 mg), Mexico (4.5 mg), the Netherlands (3.7 mg), and the OPEC nation Nigeria (3.0 mg) rounded out the top five for the month. Year-to-date 2011 exports of undenatured ethanol stand at 173.3 mg, or 23 percent of total exports. Through the first nine months of the year, Canada and Brazil remain neck-and-neck as the leading markets for U.S. ethanol exports. Canada has imported 210 mg of U.S. ethanol, while Brazil has received 202 mg. Together, these two markets have account for 55 percent of total U.S. export demand. After hitting an annual high in August, distillers grains (DG) exports dipped 17 percent in September. U.S. exports of DG totaled 685,483 metric tons (mt), down from 829,489 mt in August. For the first time this year, China was the leading destination for DG exports, receiving 180,069 mt. That is up 19 percent from August and the highest level of exports to China since November 2010. Mexico, which had been the leading market for U.S. DDGS exports in the first eight months of the year, dropped to second with 122,444 mt. Canada, Vietnam and Taiwan were other top markets in September. Year-to-date exports of DG stand at 5.94 million mt, meaning the U.S. is on pace to export nearly 8 million mt in 2011, down about 11 percent from 2010.     DDGS, Ethanol, Exports 2011-11-10T17:16:33+00:00 http://www.ethanolrfa.org/exchange/entry/ethanol-and-water-hold-the-ice/ http://www.ethanolrfa.org/exchange/entry/ethanol-and-water-hold-the-ice/ Recent claims from some marine engine manufacturers that E15 ethanol blends will ruin marine engines are meant solely to incite fear and not meaningful discussion.  A meaningful discussion would note that E15 is illegal for use in marine engines, that the testing being cited is not comprehensive, and that the ethanol industry has repeatedly extended olive branches to work on the concerns boaters and others have raised. As ethanol blended fuel has become more ubiquitous across the nation, the Renewable Fuels Association has worked diligently to inform all potential users about the characteristics of the fuel.  That includes passenger vehicle owners, boaters, lawn equipment users, and more. In fact, in many cases, the RFA has provided more information than is likely necessary for the safe, effective, and legal use of ethanol blends.  This is especially true of the marine engine community.  The RFA has always listened to the concerns of the marine and small engine community.  We appreciate that marine engines may face unique challenges with operating environment and fuel storage concerns.  That is why the RFA has responsibly and repeatedly made efforts to educate boat owners on the proper use and storage of ethanol blends. Because of this good faith effort, the recent touting by Mercury Marine and other marine engine lobbyists of their testing that purports to show their engines failing on E15 blends seems to run counter to what had been a constructive dialogue.  The testing being touted is not definitive nor is being presented in full context. Let’s review the context. First, it must be noted that it is illegal to use E15 in a marine engine from Mercury or anyone else.  The RFA believes the EPA’s labeling and misfueling mitigation plans clearly presents the information consumers need to use E15 legally and appropriately.  We also believe that consumers are savvy enough to know what is right and what is wrong for their equipment. Beyond this important point, the testing and the promotion of the results are incomplete.  From a purely statistical point of view, the small number of engines included in the study precludes making any definitive statements about the effect of E15 on all marine engines.  It is also quite relevant to note that one of the engines tested on E15, a marine motor from Volvo, did not fail. More to the point, however, is that marine engines are made to run on a certified fuel containing no ethanol.  These engines are built to run on old fashioned gasoline.  So, it should come as no surprise that a 15% increase in the amount of ethanol in the fuel would cause some abnormalities in the functioning of engines not designed for cleaner alternative fuels.  The point here is that the results being touted are not a surprise to anyone.  Rather, they underscore the need for marine engine manufacturers to update their engineering to produce motors designed for at least E10.  As designed, these engines are optimized for gasoline (E0) but can, and often do, run on E10. In fact, Mercury Marine makes that point very clear on its website noting, “Fuels containing up to 10 percent ethanol are considered acceptable for use in Mercury engines.”  By modernizing engine designs to be optimized for at least E10, such engines could handle E15 with ease.  This technology is by no means foreign to Mercury or other marine engine makers.  Currently, Mercury Marine sells certain models in Brazil where the fuel contains as much as 25% ethanol.  While regulations in Brazil are different, it highlights the point that the engineering acumen not only exists, but is being put to use.   The RFA has fully supported the path taken by EPA with respect to E15 and small and marine engine platforms.  We appreciate their unique concerns.  That is why we continue to supply updated materials for the proper use and storage of ethanol blends for these kinds of engines. Like it or not, however, higher level blends of ethanol will be fuels in the future.  We would enthusiastically embrace a constructive relationship with marine engine makers to ensure the engines they are building for the future anticipate changes in fuel blends rather than having to react with opposition when blends change.  Safety, E15, Ethanol, Fuel 2011-11-04T15:21:15+00:00 http://www.ethanolrfa.org/exchange/entry/america-needs-more-fiascos-like-ethanol/ http://www.ethanolrfa.org/exchange/entry/america-needs-more-fiascos-like-ethanol/ If you were to listen only to critics of ethanol, you would believe that ethanol is responsible for nearly every trouble the world is facing.  Food riots in corrupt nations where nearly half of food supplies sit and rot?  Ethanol did that.  Black market loggers and subsistence farmers in Brazil clear cut rainforests?  That’s ethanol in the good ol’ US of A.  And the list goes on and on – engines fail because of poor design.  Ethanol.  Gummy bear prices rise in Germany.  Ethanol.  (this really happened) All of ethanol’s critics share a common flaw when it comes to their claims – they cherry-pick the topics on which they opine and ignore very relevant facts.  The most recent example is this rant from Dave Juday in The Weekly Standard.  Mr. Juday is a frequent critic of ethanol.  In fact, that seems to be the only topic on which he will opine for The Weekly Standard.  Therefore, attempting to change his mind by arguing his selected points would be an exercise in futility. Rather, it would be far more worthwhile to readers to provide all of the facts about ethanol with the proper context.  Let’s start with the oldest of the canards – ethanol takes more energy to produce than it yields. According to the most recent analysis of ethanol’s energy balance, researchers at USDA demonstrate that ethanol returns between 1.7-2.3 units of energy for every unit of fossil energy put into the process.  This is consistent with other research and trends in ethanol production.  For example, between 2001 and 2008, ethanol biorefineries reduced energy requirements by 28 percent on average.  Efficiency gains were also made in electricity use (down 32 percent) and ethanol yields (up 5.3 percent).    Then, there is the most famous of the canards – ethanol is using up the world’s food.  On a net basis, US ethanol production uses just 3 percent of the world’s grain supply.  On a US scale, ethanol production uses just 25 percent of the nation’s corn supply on a net basis.  That is a far cry from the 40 percent numbers to which critics of ethanol desperately cling.  Let’s be clear:  the net here is extraordinarily important.  Critics of ethanol often refuse to acknowledge the contribution ethanol production makes to the feed market by returning one-third of every bushel of corn back to the market in the form of feed and displacing some soybeans in the feed market as well.    Ethanol feed production will grow to nearly 40 million metric tons this year – enough feed for some 50 billion quarter-pounders (with or without cheese).  A recent analysis from USDA determined that a metric ton of ethanol feed replaces 1.22 metric tons of tradition feed rations composed of corn AND soybean meal.  That means that those commodities are free to be used elsewhere in the market. Let’s not forget ethanol’s contribution to ending America’s reliance on imported oil.  In 2010, the use of 13 billion gallons of ethanol reduced the need for oil imports by 445 million barrels – more oil than we import from Saudi Arabia.  That saved some $34 billion in direct oil purchases and countless billions in indirect costs that are associated with increasingly harmful sources of petroleum, like tar sands.  It also needs to be mentioned that ethanol is an extraordinary economic opportunity for thousands of rural communities.  Ethanol production helps give 400,000 Americans a job to get to in the morning.  It adds value to crops produced by local farmers in the form of a high-octane fuel and highly nutritious animal feed.   All of this helped increase household incomes by $16 billion in 2010 and added even more to local economies as farmers, truckers, machinery dealers, and auto retailers all have more economic opportunities.  This is on top of the $0.89 per gallon that ethanol helped save all American families at the pump, according to research from Iowa State University and the University of Wisconsin.  All of these benefits are a direct result of America’s commitment to ethanol and renewable fuels.  It is true that a very targeted tax incentive for the use of ethanol helped grow the industry today.  It didn’t cost Americans a dime – it was simply a tax credit that end users of ethanol could take that ultimately lowered the price of gasoline blended with ethanol at the pump.  But that tax incentive expires at the end of the year.  So, too, does the tariff on imported ethanol that exists only to offset the value of the tax credit which is available to every gallon of ethanol blended in the US, regardless of its origin.  America’s antiquated fuel system and regulations have created a situation in which the market for ethanol is artificially constrained.  This fact, combined with the fact that US ethanol is the most cost-competitive motor fuel in the market today, has created export opportunities.  The ethanol industry would much prefer to use every gallon of ethanol we produce domestically.  But, that cannot happen until regulations are modernized.  That is why E15 ethanol blends – and higher ethanol levels designed for use in flexible fuel vehicles (FFVS) – are so critical. The US EPA has determined that, after testing vehicles for the equivalent distance of 6 round trips to the moon, E15 is safe for cars, trucks, and SUVs made in 2001 and since.  Now, some critics of ethanol have cried foul (or fowl, depending upon who is crying) asserting that this split of the market will create refueling “chaos”.  The ethanol industry believes that these lobbies are shortchanging their customers.  Not only is EPA’s testing more than sufficient to support the decision they made, their labeling and misfueling mitigation plan provides consumers with the factual information they need to use, or not use, E15 according to the vehicle or boat or weed whacker they are refueling. Ethanol is not the perfect fuel; that fuel does not exist.  Nor are the policies encouraging greater reliance on domestically-produced biofuels.  But, they are leaps and bounds ahead of anything relating to petroleum or other fossil fuels and are laying the cornerstones of an even more aggressive, forward looking energy strategy that, to borrow a phrase from Amory Lovin’s new book, will turn petroleum into whale oil. If more domestic jobs, reduced reliance on imported oil, and cleaner air is a "fiasco," then America needs more "fiascos." DDGS, Ethanol, Food, Jobs, Tariff 2011-10-28T19:35:31+00:00 http://www.ethanolrfa.org/exchange/entry/august-ethanol-exports-dip-ddgs-exports-set-record-high/ http://www.ethanolrfa.org/exchange/entry/august-ethanol-exports-dip-ddgs-exports-set-record-high/ After setting a new monthly record in July, U.S. ethanol exports were down sharply in August, according to government data released today. Exports of denatured and undenatured (non-beverage) ethanol totaled 52.1 million gallons (mg) in August, down from 127.4 mg in July and the lowest monthly total of the year. Still, year-to-date (Jan.-Aug.) ethanol exports stand at 640.7 mg, nearly triple the amount exported during the same period last year. The United States remains on pace to export more than 900 mg in 2011. Exports of denatured ethanol totaled 43.3 million gallons in August, with Canada receiving 26.4 million gallons. The United Kingdom (10.5 mg) and the Netherlands (5.1 mg) were other top destinations. Notably, Brazil and the United Arab Emirates, which have been leading markets for ethanol exports in 2011, did not import any U.S. product in August. The U.S. exported 8.9 million gallons of undenatured ethanol in August, with Mexico (3.9 mg), the Netherlands (2.3 mg) and Singapore (2.2 mg) accounting for 94% of total shipments. While ethanol shipments swooned in August, distillers grains (DDGS) exports hit their highest level of the year. DDGS exports for the month totaled 829,489 metric tons (mt), up 29% from July. Mexico was the leading destination for U.S. DDGS exports, receiving 196,685 mt (24% of total shipments). China was second with 151,204 mt. This marks the highest level of exports to China since December 2010. Canada, Japan, ad Ireland rounded out the top five DDGS export customers in August. Year-to-date DDGS exports stand at 5.25 million mt, and the industry is on pace to ship nearly 8 million mt in 2011.     DDGS, Ethanol, Exports 2011-10-13T19:30:56+00:00 http://www.ethanolrfa.org/exchange/entry/fowl-policy-why-corn-stocks-to-use-ratio-doesnt-work-as-rfs-policy-foundati/ http://www.ethanolrfa.org/exchange/entry/fowl-policy-why-corn-stocks-to-use-ratio-doesnt-work-as-rfs-policy-foundati/ Reps. Bob Goodlatte (R-VA) and Jim Costa (D-CA) are pushing legislation that would require the EPA to waive a portion of the annual Renewable Fuel Standard (RFS) when the corn stocks-to-use ratio falls below 10 percent. The ratio is a simple measure of ending stocks (corn left over after all demands are met) divided by total demand. The stocks-to-use ratio has been used by participants in the marketplace as rough gauge of prevailing supply-demand conditions. But history shows the ratio is, at best, a crude and highly volatile indicator of market conditions that is not fit to serve as a mechanism for important public policy decision-making. Under the Goodlatte/Costa proposal, the amount of the waivered volume would depend on the stocks-to-use ratio at the time EPA sets RFS standards for the following year. If the ratio is above 10 percent, no waiver is required; a ratio of 7.5-10 percent would result in lowering the RFS for renewable fuel by 10 percent; a ratio of 6.0-7.49 percent would trigger a 15 percent waiver; a ratio of 5.0-5.99 would trigger a 25 percent waiver; and a ratio of less than 5.0 percent would result in a 50 percent waiver. This type of approach to waiving the RFS is dangerous and misguided for a number of reasons, but a primary concern is the fact that a decision with annual implications would be made based on a highly volatile and imprecise ratio that can change dramatically from month as supply-demand conditions change. Further, USDA has a history of underestimating new crop ending stocks with early estimates. USDA’s first estimate of stocks-to-use has been significantly lower than final estimate in each of last three complete crop years (2007/08-2009/10).     As an example of the month-to-month volatility of the estimate, the 2007/08 ending stocks estimate fluctuated by more than 1 billion bushels in just five months. And the 2009/10 ending stocks estimate fluctuated by 460 million bu. in just one month.   Such fluctuations beg a very simple yet serious question:  How can estimates with such variability be relied upon for a policy decision with year-long implications? The only answer is they can’t.  The stocks-to-use ratio provides a snapshot in time – nothing more or nothing less.  Changes in this ratio, as we have seen, can be quite large from month to month and can lead to gross misrepresentations of actual market dynamics. University of Illinois economist Darrell Good cautions that stocks-to-use ratio should only be considered as “a starting point (for estimating potential price impacts) since very different supply and demand conditions in individual years can lead to similar ratios of stocks-to-use but very different prices.”[1] Because of this, Good writes, “…the relationship between stocks-to-use and price is not consistent over time.” Such a crude indicator of potential market conditions should not be used as the basis for policy. Put simply, the stocks-to-use ratio from a single month is not an appropriate metric for an annual policy decision with very real implications for the American fuels market.  Congress should ignore this bill for no other reason than it is based on an idea that has no real world supporting data.  [1] Good, D. July 2004. Corn: Large Crop, Strong Demand. University of Illinois/Purdue University Grain Price Outlook: 2004—No. 5. Renewable Fuels Standard 2011-10-05T14:28:13+00:00 http://www.ethanolrfa.org/exchange/entry/a-fresh-look-at-corn-stocks-co-products-and-ethanol-production/ http://www.ethanolrfa.org/exchange/entry/a-fresh-look-at-corn-stocks-co-products-and-ethanol-production/ According to the USDA quarterly grain stocks report released this morning, end stocks of corn for the 2010/2011 marketing year stand at 1.13 billion bushels.  That is nearly 200 million bushels higher than many experts were predicting and an indication that the market is working to ensure sufficient supplies of corn remain available for all uses. Pushing corn stocks back above one billion bushels is important for the psyche of the market.  Having more corn available should somewhat ease supply concerns brought on by poor growing conditions this year and provide more of a buffer until farmers complete the harvest of this year’s crop.  Despite this temporary tightness in the corn market, it is clear that with the proper market signals American farmers can and will ensure enough corn is available for all uses. As the chart below demonstrates, the livestock feed produced at US ethanol biorefineries (known as distillers grains or DDGS) provides a substantial amount of supply to the feed market.  On a net basis, ethanol production consumes 25 percent of the nation’s corn crop.  When the amount of corn used for ethanol feed co-products is combined with feed and residual demand, total feed demand becomes 6.35 billion bushels, or 47 percent of expected use in 2011/12. Much has been made of the smaller than usual carryover in corn supplies and the impact this may have on corn prices.  Predictably, many of the critics of ethanol including fast food chains, corporate livestock and meat processors, and food manufacturers have eagerly sought to blame ethanol production for higher prices.  As the RFA has pointed out time and again, such claims simply lack any fundamental statistical evidence.  As the chart below notes, corn prices hovered between $3-4/bushel and were actually trending downward during the period of high growth for ethanol production (1/09 to 8/10). Ethanol use was flat or declining in the period when corn prices spiked to $6/bushel and then to $7/bushel. The bottom line remains that ethanol’s influence on corn prices is marginal and has been greatly exaggerated by our critics.  Corn prices and retail food prices increase for a host of reasons, not the least of which is the price of oil. Speaking of ethanol production, monthly data from the Energy Information Administration is available and shows that through July, the US industry had produced 8.028 billion gallons. Based on these numbers, the industry is on pace to supply more than 13.8 billion gallons for calendar year 2011.  However, it is important to note that ethanol production in August and September has shown a slight downward trend as noted by the weekly ethanol production data.  As the RFA noted on Wednesday, the current 4-week average for ethanol production would yield 13.5 billion gallons of ethanol over a full 52-week year.  The RFA is predicting 2011 ethanol production to be approximately 13.7 billion gallons.  To see complete year to date ethanol production, import, and export data, click here. Agriculture, DDGS, Ethanol, Food, Production 2011-09-30T16:48:28+00:00 http://www.ethanolrfa.org/exchange/entry/another-record-month-for-u.s.-ethanol-exports/ http://www.ethanolrfa.org/exchange/entry/another-record-month-for-u.s.-ethanol-exports/ U.S. ethanol exports in July set a new monthly record, according to government data released today. Exports of denatured and undenatured (non-beverage) ethanol totaled 127.4 million gallons in July, edging out the April total of 120.1 million gallons to set a new record. July exports were nearly double the amount exported in June. Top destinations in July were Canada, Brazil, and European Union. Through the first seven months of 2011, the United States has exported 588.5 million gallons of ethanol, or roughly 7.5% of total output during that same period. Year-to-date exports in 2011 are already more than the combined total of 2009 and 2010 exports. The U.S. ethanol industry remains on pace to export 800-900 million gallons of ethanol for the entire 2011 calendar year. Exports of denatured ethanol in July topped 100 million gallons for the first time ever, coming in at 104.6 million gallons. For context, this is equivalent to the annual output of a typical large ethanol facility. Canada was the top export destination in July, receiving 33.8 million gallons of denatured product. Brazil imported 16.1 million gallons, while the United Kingdom (14.0 mg), United Arab Emirates (13.6 mg), and Netherlands (12.3 mg) rounded out the top five. Together, the top five destinations accounted for 86% of July denatured ethanol exports. Undenatured ethanol exports totaled 22.7 million gallons in July, more than triple the amount exported in June. Brazil was the top export market for undenatured product, receiving 12.9 million gallons. Other top destinations were the Philippines (3.9 mg), Netherlands (3.2 mg), and Mexico (2.6 mg). Unprecedented U.S. ethanol exports continue to be driven by the fact that corn ethanol is currently the lowest-cost motor fuel source in the world. High sugar prices and lower-than-expected sugarcane ethanol output in South America have allowed the United States to overtake Brazil as the world’s leading ethanol exporter. In fact, Brazil and Canada are neck and neck as the leading importers of U.S. ethanol so far in 2011. Canada has imported 155.5 million gallons of ethanol through July, while Brazil has imported 155 million gallons. Together, these two countries have accounted for half of U.S. exports this year. Exports of distillers dried grains with solubles (DDGS), the animal feed co-product resulting from grain ethanol production, totaled 644,525 metric tons in July, up nearly 8% from June. Mexico continued as the top DDGS export, receiving 156,400 metric tons in July. China (106,606 mt), Canada (63,707 mt), the United Kingdom (47,513 mt), and Vietnam (40,265 mt) rounded out the top five. Notably, exports to China have increased in three consecutive months after sliding significantly from late 2010 through April 2011. Year-to-date DDGS exports total 4.43 million metric tons, meaning the U.S. is on pace to export roughly 7.6 million metric tons in 2011.   Ethanol, Exports 2011-09-08T13:53:45+00:00 http://www.ethanolrfa.org/exchange/entry/improvements-in-ethanol-process-result-in-lower-ghg-emissions/ http://www.ethanolrfa.org/exchange/entry/improvements-in-ethanol-process-result-in-lower-ghg-emissions/ America is home to the most innovative, productive and efficient ethanol and grain producers in the world. As I noted in two previous blog posts on improvements in farming practices and ethanol efficiency, the trend line for both industries is toward greater productivity utilizing fewer resources. When viewed as a total system, the improvements at the farm level and the biorefinery have a multiplying effect. The eagerness of farmers and ethanol producers to embrace and implement cutting edge technologies has made American ethanol production the most efficient and cost effective in the world.  In 2008-2010, the ethanol industry was producing some 440 gallons of ethanol per acre, a 50% improvement over the average from just 15 years earlier.  Future projections, which include the use of cellulosic ethanol production from corn cobs and stalks left on the field and the fiber found in the kernel, could approach 800 gallons of renewable fuel per acre.  This increasing productivity and efficiency contributes directly to ethanol’s ability to lower greenhouse gas emissions from gasoline on a lifecycle basis (“well-to-wheels” or “cradle-to-grave”).  Six recent analyses show that corn ethanol reduces GHGs by 28-53% using current technologies.  As the data has demonstrated, these GHG reductions will only increase as new technologies are made available. Meanwhile, the energy intensity and GHG profile of crude oil extraction and refining continues to worsen.   Whether it’s fertilizer use on the farm or water consumption at an ethanol biorefinery, American farmers and ethanol producers are consciously investing in technology that dramatically lowers their carbon footprint while producing more fuel, feed, and food than ever before. The same cannot be said for petroleum production.  As the “easy” sources of oil are depleted, new sources are proving harder to extract and more costly to refine – both from a financial standpoint and in terms of environmental impacts. As we will look at next week, exploiting tar sands in Canada or endangering marine life in the Gulf are not sustainable approaches to meeting our energy needs in the decades to come.  Ethanol, Energy, Environment 2011-08-25T14:38:18+00:00