Ethanol Production, Stocks Down on Week, Up on Year

Ethanol Production

The U.S. Energy Information Administration (EIA) reports that ethanol production averaged 1.052 million barrels per day (b/d) over the week ending July 15, 2023. This is a decrease of 12,000 b/d compared to the previous week and a decrease of 37,000 b/d compared to the same week last year.

Midwest ethanol production decreased to 856,000 b/d, down 9,000 b/d from the previous week and down 35,000 b/d from the same week last year. The Plains region produced 55,000 b/d, a decrease of 2,000 b/d from the previous week and a decrease of 1,000 b/d from the same week last year.

Other regions saw mixed results. The Gulf Coast region's production increased by 2,000 b/d to 48,000 b/d, while the West Coast region's production decreased by 1,000 b/d to 21,000 b/d. The East Coast region maintained the same production level of 72,000 b/d.

Despite the weekly decline in production, EIA data shows that ethanol production is still up year-over-year. The average ethanol production for the past four weeks is 1.053 million b/d, which is 129,000 b/d higher than the same period last year.

The increase in year-over-year production is attributed to the growing demand for ethanol in the transportation sector. The U.S. Environmental Protection Agency (EPA) has mandated the use of biofuels, including ethanol, in gasoline. This mandate has helped to increase the demand for ethanol and has supported the growth of the ethanol industry.

Ethanol Stocks

Ethanol stocks decreased by 1.193 million barrels over the week ending July 15, 2023. This brings the total ethanol stocks to 23.893 million barrels, which is 1.837 million barrels lower than the same week last year.

The Midwest region, which holds the majority of ethanol stocks, reported a decrease of 1.041 million barrels. The other regions also saw declines in their ethanol stocks.

Lower ethanol stocks are typically seen during the summer months when demand for gasoline is higher. As the summer driving season comes to an end, ethanol stocks are expected to increase as refiners switch to winter-blend gasoline, which contains lower levels of ethanol.

Conclusion

Ethanol production declined slightly over the week ending July 15, 2023, but remains up compared to the same week last year. This is due to the increasing demand for ethanol in the transportation sector. Ethanol stocks also decreased over the week, but are still higher than the same period last year. This is typical during the summer months when demand for gasoline is higher.

The ethanol industry is expected to continue to grow in the coming years as demand for renewable fuels increases. The EPA's recently proposed Renewable Fuel Standard (RFS) for 2024-2025 is expected to further drive the growth of the ethanol industry.