Drop in gasoline demand ‘wreaking havoc’ on ethanol industry

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Drop in gasoline demand ‘wreaking havoc’ on ethanol industry

Several ethanol plants across the Midwest have shut down or decreased production because of negative margins.

Monte Shaw with the Iowa Renewable Fuels Association says the coronavirus-related drop in gasoline demand is “wreaking havoc” on the industry.

“The numbers I’ve read are about 30 percent of gasoline is gone,” Shaw says. “If there’s 30 percent less gasoline being used, then there’s going to be 30 percent less ethanol going into those E10 blends. Take 30 percent times a 15 to 16 billion gallon industry and you’ve got some pretty big numbers.”

Shaw says the industry did receive some good news this week when the Trump Administration decided not to appeal the 10th Circuit court ruling on small refinery exemptions.

“While it’s probably not going to move any numbers today, I do think that this will pay off in the long run if the EPA chooses to apply it nationwide—which is the market signal we wish they would send right away.”

Shaw says if the court ruling is implemented nationally, it would significantly reduce the number of RFS waivers granted by EPA.  He estimates there would be seven or less, compared to the 30-plus waivers the EPA has been handing out annually.

AUDIO: Monte Shaw

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