Ethanol production rebounds to highest level in 11 months

Source: Amanda Peterka, E&E reporter • Posted: Friday, May 24, 2013

Ethanol production is at its highest level since the beginning of last summer, when drought and high corn prices began to bring ethanol plants to a halt around the country.

The Energy Information Administration yesterday reported that ethanol production averaged 875,000 barrels a day, or 36.75 million gallons a day, last week. Production was up 18,000 barrels per day compared with the previous week and at its highest level since the week ending June 22, 2012.

Stocks of ethanol fell to 16.2 million barrels, 1.5 percent lower than last week and the lowest level since 2010, indicating strong demand for ethanol. Imports of ethanol from other countries was at zero.

The rise in ethanol production comes after a rough year for the industry, in terms of both its production and its image among policymakers.

At the beginning of last June, ethanol production reached about 920,000 barrels a day but slumped as the drought hit the nation’s major corn-producing regions and corn prices spiked to $7 a bushel. About 25 ethanol facilities were idled throughout last summer and fall as producers saw their profit margins shrink.

In September, monthly production fell below 1 billion gallons for the first time since 2010.

Even as producers idled their plants, several livestock-state governors blamed ethanol and the renewable fuel standard for high corn prices, asking U.S. EPA to waive its annual corn ethanol requirements. The agency ultimately denied the requests, but the debate over the renewable fuel standard has stretched into the legislative arena this year.

Both the livestock and the ethanol industries will be at the mercy of the weather again this year. The National Turkey Federation director of legislative affairs, Damon Wells, said that livestock producers were still recovering from last year’s drought and that he would expect producers to request a waiver if conditions dry up again.

Although ethanol production has picked up this year, it is still below the level mandated under the renewable fuel standard, which requires that 13.8 billion gallons be blended into the nation’s motor fuel supply in 2013. Based on the most recent four-week average, production this year would be 13.15 billion gallons.