EIA predicts ethanol production will remain flat through 2021

By Erin Voegele | January 15, 2020

The U.S. Energy Information Administration maintained its December forecast that U.S. ethanol production will average 1.03 million barrels per day in 2020 in its latest Short-Term Energy Outlook, published on Jan. 14. That level of production is expected to continue through 2021. 

In the STEO, the EIA notes that U.S. ethanol producers experienced weakening operating margins last year as a result of limited demand growth and oversupply. As a result, ethanol production fell for the first time in seven years, down 2 percent from 2018 levels to an average of 1.03 million barrels per day. The EIA currently forecasts that limited domestic and global demand growth potential will result in ethanol production staying largely unchanged in 2020 and 2021.

Ethanol consumption averaged 951,000 barrels per day last year. The EIA predicts consumption will fall to 947,000 barrels per day this year, and 945,000 barrels per day in 2021, driven by falling motor gasoline consumption. The predicted level of consumption would result in the ethanol share of total gasoline, which was estimated at 10.1 percent in 2018 and 10.02 percent in 2019, remaining relatively flat in 2020 and 2021. The EIA said that stable ethanol share assumes growth in higher level ethanol blends is limited by a combination of unfavorable blending economics compared with gasoline, depressed renewable identification number (RIN) prices, and limited consumer demand for ethanol blends beyond 10 percent.

Biodiesel production fell by nearly 2 percent from 2018 to 2019, averaging approximately 119,000 barrels per day last year. The EIA said it expects biodiesel production to increase by 13 percent this year to 135,000 barrels per day, and by 17 percent in 2021, reaching 158,000 barrels per day. The increase is expected to be driven by increasing Renewable Fuel Standard targets and the renewal of the biodiesel production tax credit through 2022.

Net imports of biomass-based diesel were up 47 percent, reaching 23,000 barrels per day in 2019. The EIA expects net imports to increase to 28,000 barrels per day this year and 39,000 barrels per day in 2021. The expected increase is attributed to increased volumes of renewable diesel imported to meet both the California Low Carbon Fuel Standard requirements and rising RFS targets.

The EIA’s most recent weekly data shows ethanol production reached a near record high of 1.095 million barrels per day for the week ending Jan. 10, up from 1.062 million barrels per day the previous week.

Ethanol ending stocks reached 23.006 million barrels the week ending Jan. 10, up from 22.462 million barrels the previous week.

The agency’s most recent monthly data shows the U.S. imported 522,000 barrels of ethanol in October, all from Brazil. During the same month, the U.S. exported 2.689 million barrels of ethanol, primarily to Canada, India, and Brazil.