EIA predicts ethanol production will hold steady through 2016

By Erin Voegele | August 11, 2015

The U.S. Energy Information Administration has published the August edition of its Short-Term Energy Outlook, predicting that ethanol production will remain near current levels in 2015 and 2016. A similar prediction was made in the July STEO

Within the report, the EIA indicates that the U.S. EPA’s proposed rule to set volume obligations for the 2014, 2015 and 2016 renewable fuels standard (RFS) was used to develop the current short-term outlook.

According to the EIA, ethanol production averaged 935,000 barrels per day last year, and is expected to remain near current levels through next year. On a quarterly basis, the EIA shows ethanol production averaged 960,000 barrels per day during the first quarter of this year, falling to 950,000 barrels per day during the second quarter. During the third and fourth quarters, ethanol production is expected to average 940,000 barrels per day. Moving into 2016, production is expected to average 960,000 barrels per day during the first quarter, falling to 940,000 barrels per day during the second and third quarters, and 930,000 barrels per day during the fourth quarter.

Ethanol consumption averaged 878,000 barrels per day last year and is expected to average 900,000 barrels per day this year and next year, resulting in a 9.9 percent ethanol share of the total gasoline pool. According to the EIA, it does not expect to see significant increases in E15 or E85 consumption over the forecast period. The administration also noted that proposed RFS targets are expected to encourage the import of Brazilian sugarcane ethanol, with averaged 3,000 barrels per day last year. Due to the expected increase in ethanol gross imports, net exports of ethanol are expected to fall from 51,000 barrels per day last year, to 43,000 barrels per day this year and 37,000 barrels per day in 2016.

Biodiesel production averaged approximately 81,000 barrels per day last year, and is expected to increase to an average of 91,000 barrels per day this year. In 2016, production is expected to reach 98,000 barrels per day. Net imports of biomass-based diesel are also expected to increase, from 16,000 barrels per day in 2014 to 24,000 barrels per day this year and 35,000 barrels per day next year.

The EIA said it expects a combination of higher biomass-based diesel consumption, higher consumption of domestic and imported ethanol, and banked renewable identification numbers (RINs) will help meet the newly proposed RFS volumes through 2016.

According to the STEO, U.S. regular gasoline monthly average retail prices averaged $2.79 per gallon in July, down 1 cent per gallon from June and 82 cents per gallon lower than in July 2014. EIA expects the monthly average gasoline prices to decline from their July level to an average of $2.11 per gallon during the fourth quarter of this year. The EIA also predicts U.S. regular gasoline retail prices will average $2.41 per gallon for all of 2015.

According to the EIA’s most recent weekly ethanol production data, production averaged 961,000 barrels per day the week of July 31, down slightly from 965,000 barrels per day the prior week. The administration’s most recent monthly data, shows only 8,000 barrels of ethanol was imported in May, all from Canada. May exports, however, were 1.54 million barrels. Canada, Brazil, and Oman were the top three export destinations during the month.