U.S. Ethanol Plants Reducing Output Due to Crashing Demand

Reuters, March 26, 2020

U.S. ethanol producers are on track to shut about 2 billion gallons of annualized output by the end of this week because of a slump in demand for fuel, the head of the Renewable Fuels Association trade group said on Monday.

Biofuel producers are feeling the impact of an energy industry in crisis as countries including the United States take unprecedented steps to contain the coronavirus pandemic, curbing demand for products such as gasoline and jet fuel.

It looks to us like we’re nearing 2 billion gallons of capacity on an annualized basis that was operating as recently as a month ago that we think by the end of this week will be offline,” RFA President Geoff Cooper told Reuters.

The United States blends about 15 billion gallons of ethanol into the nation’s gasoline each year.

Cooper said he was urging Congress and the Trump administration to help the industry and its workers.

We’re going to be advocating for measures that will help our producers retain their workers, period,” he said.

We know a number of plants have already been forced to idle, we know more are coming and they don’t want to lose their workers,” he said.

The profit margin for producing ethanol in the United States, as measured by Iowa State University’s Center for Agricultural and Rural Development (CARD), fell last week to minus 9.68 cents per gallon, a seven-year low.

U.S. Senators Chuck Grassley and Joni Ernst of Iowa have asked the Trump administration to help the industry by adhering to a court ruling that would slash the use of waivers exempting small refineries from their biofuel blending obligations.

They asked the administration not to appeal the January ruling, but had not heard back yet, Grassley said on Monday. “We haven’t been told one way or another officially,” he told reporters on a conference call.

The Environmental Protection Agency and White House have declined to comment.

A group of Texas lawmakers has been urging the Trump administration to appeal the decision, arguing it could cost countless blue-collar jobs in the refining industry.

(Reporting by Stephanie Kelly; Editing by Richard Valdmanis and Peter Cooney)

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