EIA increases 2015, 2016 ethanol production forecast

By Erin Voegele | December 08, 2015

The U.S. Energy Information Administration has released the December edition of its Short-Term Energy Outlook, increasing its forecast for 2015 and 2016 ethanol production.

With the Nov. 30 release of the U.S. EPA’s rule to set 2014, 2015, and 2016 volume obligations under the renewable fuel standard (RFS), the EIA now predicts U.S. ethanol production will average approximately 960,000 barrels per day this year and next year. Production averaged 934,000 barrels per day in 2014. In the November edition of the STEO, which was published before EPA’s final RFS rule, the EIA predicted 2015 and 2016 ethanol production would average more than 950,000 barrels per day.

The EIA predicts ethanol consumption will average 905,000 barrels per day this year, up from 877,000 barrels per day last year. In 2016, ethanol consumption is expected to increase to 918,000 barrels per day. According to the EIA, the 2016 consumption forecast is approximately 20,000 barrels per day higher than the prediction made in the November STEO. This level of consumption results in the ethanol share of the total gasoline pool averaging 9.9 percent this year and 10 percent in 2016. The EIA indicated it does not expect significant increases in E15 or E85 consumption over the forecast period.

The EIA predicts the RFS rule will have the largest effects on biodiesel consumption. According to the EIA, biodiesel production is expected to increase from an average of 83,000 barrels per day last year, to 87,000 barrels per day this year and 107,000 barrels per day next year. Net imports of biomass-based diesel are expected to increase from 15,000 barrels per day last year to 28,000 barrels per day this year and 47,000 barrels per day in 2016.

The monthly average price of U.S. regular retail gasoline was $2.16 per gallon in November, down 13 cents per gallon from October and 75 cents per gallon lower than in November 2014. According to the EIA, gas prices are expected to average $2.04 per gallon in December, and $2.36 per gallon in 2016.

The EIA’s most recent weekly ethanol production data shows production averaged 656,000 barrels per day the week of Nov. 27, down from a record high of 1.008 million barrels per day the week of Nov. 20.

Ethanol exports were nearly 1.44 million barrels in September, with Canada, India, South Korea, Peru, and Mexico listed as the top five export destinations. Ethanol imports reached 505,000 barrels in September, with 498,000 barrels imported from Brazil and 7,000 barrels imported from Canada.