EIA predicts strong ethanol rebound in 2014

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Monday, January 14, 2013

On Jan. 8, the U.S. Energy Information Administration released the January issue of its Short-Term Energy Outlook, which is the first to include forecasts for 2014. The EIA’s analysis predicts that ethanol production will rebound, beginning in the second half of 2013.

According to the outlook, fuel ethanol production fell from an average of 900,000 barrels per day in the first half of 2012 to an average of 820,000 barrels per day during the second half of the year. Reiterating the prediction it make in the Dec. 2012 issue of the Short-Term Energy Outlook, the EIA still expects to see ethanol levels remain at current levels through the first half of 2013, before recovering to pre-drought levels during the second half of the year. The expected average production rate for 2013 is 870,000 barrels per day, which equates to an annual production level of approximately 13.3 billion gallons.

In the outlook, the EIA also said it expects ethanol to rebound in 2014. The agency said that previously idled capacity is expected to come back online in 2014 to help meet the renewable fuel standard (RFS) mandate. Overall, ethanol production is expected to average 915,000 barrels per day, or 14 billion gallons per year, in 2014. The production, along with banked renewable identification numbers (RINs) are expected to help meet the 2014 RFS mandate. Furthermore, the EIA said it expects ethanol’s share in the gasoline pool to increase from an average volume of 9.6 percent in 2012 to just under 11 percent by the end of 2014. The EIA specifies that the E15 and E85 fueling infrastructure will need to increase to allow for the volume increase.

With regard to gasoline prices, the EIA noted that it expects falling crude prices to drop the national average price for a gallon of gasoline from $3.63 in 2012 to $3.44 in 2013 and $3.34 in 2014. Total U.S. liquid fuel consumption has decreased in recent years, from 20.8 million barrels per day in 2005 to 18.6 million barrels per day in 2012. However, the EIA said it expects total consumption to increase slowly over the next two years, to an average of 18.8 barrels per day in 2014. The growth is expected to be driven by increased use of distillate and liquefied petroleum gas. Consumption levels for gasoline and jet fuel are expected to remain flat.