EIA: Ethanol production to remain relatively flat in 2019, 2020

By Erin Voegele | January 15, 2019

The U.S. Energy Information Administration has released the January edition of its Short-Term Energy Outlook, maintaining its December forecast for 2019 ethanol production levels and offering its first short-term forecast for 2020 production. 

The EIA currently predicts that ethanol production will average approximately 1.04 million barrels per day in 2019 and 2020, down from 1.05 million barrels per day in 2018. The EIA cites low ethanol producer margins and limited domestic growth potential as factors expected to limit ethanol production over the next two years.

On a quarterly basis, production is expected to average 1.04 million barrels per day during the first quarter of this year, increase to 1.05 million barrels per day during the second quarter, and return to 1.04 million barrels per day during the third and fourth quarters. In 2020, production is currently expected to average 1.04 million barrels per day during the first quarter of the year, increase to 1.05 million barrels per day during the second and third quarters, and return to 1.04 million barrels per day during the final quarter of the year.

Ethanol consumption for 2019 and 2020 is expected to average approximately 950,000 barrels per day, up from 940,000 barrels per day in 2018. According to the EIA, the increase is expected to be driven by increasing motor gasoline consumption. The agency said the forecast levels of consumption will result in the ethanol share of the total gasoline pool increasing from 10.1 percent in 2018 to 10.2 percent in 2020. “This stable ethanol share assumes growth in high-level ethanol blends is limited by recently waived volumes of renewable fuel required under the [Renewable Fuel Standard] by way of numerous small refinery exemptions, depressing D6 renewable identification number (RIN) prices and limiting the demand for higher levels of ethanol blending beyond 10 percent of gasoline (i.e., E10),” said the EIA in the STEO.

Biodiesel production is expected to average 144,000 barrels per day in 2019 and 158,000 barrels per day in 2020, up from 123,000 barrels per day in 2018. The EIA said duties imposed on foreign biodiesel imports from Argentina and Indonesia in late 2017 caused net imports of biomass-based diesel to fall from 32,000 barrels per day in 2017 to 16,000 barrels per day in 2018. Net imports are expected to remain near the 2018 level in 2019 and 2020.

The EIA’s most recent weekly data shows ethanol production fell to an average of 1 million barrels per day during the week ending Jan. 4, down from 1.011 million barrels per day the previous week.

The agency’s most recent monthly data shows the U.S. imported 464,000 barrels of ethanol in October, all from Brazil. During the same month, the U.S. exported 4.178 million barrels of ethanol, primarily to Brazil, Canada and India.