Storm forces US ethanol cuts, signaling threat of gas crunch

Source: By Kim Chipman, Bloomberg • Posted: Thursday, December 22, 2022

Some US ethanol producers are cutting back production as soaring natural gas prices amid bitterly cold temperatures in parts of the country are becoming “untenable” for the biofuel makers. The reduction for ethanol is signaling a potential squeeze on gas supplies just as the Arctic blast is set to raise demand from consumers to heat their homes.

During an extreme cold spell in February 2021, production curbs at biofuel plants were among the first signs of a gas crunch that ultimately sent energy bills soaring in Texas. At that time, some ethanol producers also sold gas back to the grid. So far this week, there are no reports of those kinds of sales. Natural gas prices are spiking to “untenable levels for many ethanol producers, causing some to drastically reduce output,” said Geoff Cooper, head of the Renewable Fuels Association. The freeze is also causing delays in getting rail cars needed to ship product, he said.