USDA economist sees growth ahead for ethanol market

Source: by Christopher Doering, Des Moines Register • Posted: Friday, February 21, 2014

The U.S. Agriculture Department’s top economist said Thursday that U.S. ethanol production is set to grow, though he stopped short of offering details.

Joe Glauber, the department’s chief economist, told an audience of lobbyists, agribusiness executives and other officials, that after the amount of corn used to produce ethanol soared last decade to meet growing demand for the fuel, it has leveled off to around 5 billion bushels annually. Corn production in the U.S. last year was nearly 14 billion bushels.

“I think we’ll see growth” resuming, Glauber said at the USDA’s Agricultural Outlook Forum. “A lot will depend on penetration of higher blends of ethanol . . . and ethanol exports.”

U.S. ethanol consumption has struggled to expand beyond the 10 percent found in most gasoline – which is a blend of 10 percent corn-based fuel and 90 percent gasoline. Efforts to promote a 15 percent ethanol blend have been slowed amid a battle between the ethanol and petroleum industries over the safety of the fuel in automobiles and whether consumers really want it.

The Environmental Protection Agency has proposed cutting how much ethanol must be blended into the fuel supply in 2014 to 15.2 billion gallons of ethanol and other biofuels, 3 billion gallons less than Congress required in a 2007 law. A final decision is expected this spring.