Ethanol industry roiled by flooding, lifting SoCal gasoline prices near $4/gal

Source: By Carl Surran, Seeking Alpha • Posted: Tuesday, April 9, 2019

The floods that inundated the Midwest also have slammed a U.S. ethanol industry that already was struggling with high inventories and sluggish domestic demand growth.

Ethanol shortages from the Midwest are one factor pushing gasoline prices in Southern California to the highest in the U.S., possibly topping $4/gal for the first time since 2014, says tracking firm GasBuddy.

The floods knocked out ~13% of U.S. ethanol production capacity, mostly from shut rail lines that serve as the main arteries for corn and ethanol deliveries; ethanol prices on the coasts spiked due to shortages, but Midwest producers have been unable to take advantage because of the washed-out rail lines, Reuters reports.

At Chicago’s Argo terminal, the main U.S. ethanol pricing hub, the cash price for ethanol fell for an eighth straight session last Friday to $1.29/gal, the longest downward skid since April 2018.

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