EIA increases 2022, 2023 fuel ethanol production forecasts

By Erin Voegele | July 13, 2022

The U.S. Energy Information Administration increased its forecasts for 2022 and 2023 fuel ethanol production in its latest Short-Term Energy Outlook, released July 13. The forecast for 2023 fuel ethanol consumption was also increased.

The EIA currently predicts fuel ethanol production will average 1.02 million barrels per day in 2022, up from the June STEO forecast of 1 million barrels per day. The agency also increased its forecast for 2023 fuel ethanol production to 1 million barrels per day, up from 990,000 barrels per day forecasted last month. Production averaged 980,000 barrels per day in 2021.

Fuel ethanol production averaged 1.02 million barrels per day in the first quarter of this year, falling to 1.01 million barrels per day in the second quarter. Production during the third quarter is expected to remain at 1.01 million barrels per day before returning to 1.02 million barrels per day in the fourth quarter. Moving into 2023, ethanol production is expected to average 990,000 barrels per day in the first quarter, 1 million barrels per day in the second quarter, 990,000 barrels per day in the third quarter, and 1.02 million barrels per day in the fourth quarter.

Fuel ethanol blending is currently expected to average 910,000 per day in 2022, a forecast maintained from the June STEO, and 920,000 barrels per day in 2023, up from 910,000 barrels per day predicted last month. Fuel ethanol blending was at 910,000 barrels per day in 2021.

According to the EIA, fuel ethanol consumption for the first half of 2022 was up when compared to the same period of last year. The agency said the increase is primarily attributed to more gasoline consumption. Similar levels of gasoline and ethanol consumption are expected for the second half of this year. The EIA currently predicts that fuel ethanol consumption will remain around 2022 levels next year and that the ethanol share of U.S. gasoline consumption will be near 10.3 percent. However, if favorable blend economics for fuel ethanol, driven by lower relative fuel prices, and high RIN prices persist, the fuel ethanol share of gasoline consumption could potentially increase.

The EIA also said consumption of biofuels has risen in the U.S. this year. That growth is expected to continue, according to the agency. Increased demand for transportation fuels, higher 2022 Renewable Fuel Standard blending obligations, and new renewable diesel production capacity coming online all contribute to that expected growth.

The EIA noted that prices for renewable identification numbers (RINs) have increased in 2022, reaching near record-high prices, which has facilitated growing biofuel consumption. When compared to the first half of 2021, ethanol consumption for the first half of 2022 was up 32,000 barrels per day, or 3 percent. During the same period, renewable diesel consumption grew by 32,000 barrels per day, or 46 percent, while the consumption of other biofuels increased by 6,000 barrels per day, or 133 percent. Biodiesel consumption was unchanged, according to the EIA.

The EIA currently predicts that renewable diesel consumption will average 116,000 barrels per day in 2022, up 41,000 barrels per day or 53 percent when compared to last year. Renewable diesel consumption is expected to average 164,000 barrels per day in 2023. The EIA cautioned that that forecast assumes that some of the capacity scheduled to come online in 2022 and 2023 will have delays or be affected by high agricultural feedstock costs.

Because 1 gallon of renewable diesel produces more RIN credits under the RFS than biodiesel and faces no infrastructure or blending constraints, the EIA said it expects new renewable diesel plants to be brought online to secure scarce oil feedstocks, such as soybean oil, outpacing biodiesel refineries and limiting biodiesel production. The agency forecasts biodiesel consumption to increase slightly from 2021 levels this year, but to decrease in 2023 as renewable diesel increasingly satisfies RFS requirements. Biodiesel production for 2022 is expected to fall 8 percent when compared to last year, averaging less than 100,000 barrels per day, the lowest annual average since 2015.