Weekly production rises after 2-month slump

Source: Amanda Peterka, E&E reporter • Posted: Friday, August 3, 2012

U.S. ethanol production rose last week for the first time since early June, when companies began scaling back production under the strain of increased corn prices.

Production averaged 809,000 barrels per day last week, up 13,000 barrels per day from the previous week, according to the federal Energy Information Administration. Stocks of ethanol also climbed last week from 19 million barrels to 19.4 million.

The last time ethanol production increased over a week was a seven-day period ending June 8. Ethanol production then averaged 920,000 barrels per day, and stocks stood at 20.7 million barrels.

Production has declined each week since then as the price of corn has climbed, forcing ethanol plants to scale back or, in a handful of cases, idle production completely. High stocks and a lower demand for gasoline over the first half of the year also created an imbalance of supply and demand, according to the Renewable Fuels Association.

Ethanol production, however, still remains below the levels mandated by the renewable fuel standard, which requires that the refiners blend 13.2 billion gallons of ethanol into the fuel supply this year. Based on the most recent four-week average, annual production of ethanol would reach a rate of 12.37 billion gallons.

The percentage of ethanol used in gasoline last week was 9.17 percent. Recent regulations allow that percentage to be as high as 15 percent.

Several livestock entities and a group of House members have asked U.S. EPA to waive the mandate for up to a year because of the high corn prices and low crop yields. Ethanol, they say, has exacerbated the drought by using up precious corn supply (Greenwire, July 27).

Ethanol producers last week used 12.266 million bushels of corn to produce ethanol and returned 90,287 metric tons of livestock feed back into the system, according to EIA.

Ethanol trade groups have urged EPA to maintain the standard, pointing to between 2.4 billion and 2.6 billion carry-over renewable fuel credits available for refiners to meet the standard.