EIA predicts strong ethanol rebound in 2014

By Erin Voegele | January 09, 2013

On Jan. 8, the U.S. Energy Information Administration released the January issue of its Short-Term Energy Outlook, which is the first to include forecasts for 2014. The EIA’s analysis predicts that ethanol production will rebound, beginning in the second half of 2013.

According to the outlook, fuel ethanol production fell from an average of 900,000 barrels per day in the first half of 2012 to an average of 820,000 barrels per day during the second half of the year. Reiterating the prediction it make in the Dec. 2012 issue of the Short-Term Energy Outlook, the EIA still expects to see ethanol levels remain at current levels through the first half of 2013, before recovering to pre-drought levels during the second half of the year.  The expected average production rate for 2013 is 870,000 barrels per day, which equates to an annual production level of approximately 13.3 billion gallons.

In the outlook, the EIA also said it expects ethanol to rebound in 2014. The agency said that previously idled capacity is expected to come back online in 2014 to help meet the renewable fuel standard (RFS) mandate. Overall, ethanol production is expected to average 915,000 barrels per day, or 14 billion gallons per year, in 2014. The production, along with banked renewable identification numbers (RINs) are expected to help meet the 2014 RFS mandate. Furthermore, the EIA said it expects ethanol’s share in the gasoline pool to increase from an average volume of 9.6 percent in 2012 to just under 11 percent by the end of 2014. The EIA specifies that the E15 and E85 fueling infrastructure will need to increase to allow for the volume increase.

With regard to gasoline prices, the EIA noted that it expects falling crude prices to drop the national average price for a gallon of gasoline from $3.63 in 2012 to $3.44 in 2013 and $3.34 in 2014. Total U.S. liquid fuel consumption has decreased in recent years, from 20.8 million barrels per day in 2005 to 18.6 million barrels per day in 2012. However, the EIA said it expects total consumption to increase slowly over the next two years, to an average of 18.8 barrels per day in 2014. The growth is expected to be driven by increased use of distillate and liquefied petroleum gas. Consumption levels for gasoline and jet fuel are expected to remain flat. 



1 Responses

  1. Michael



    Amy Myers Jaffe, director of Baker Institute Energy Forum, a poicly think tank at Rice University in Houston. "They are saying to themselves: I am going to produce the gas regardless of what the price is, because I'm making money on the oil and liquids."The article isn't about shale gas. It talks a great deal about gas production coming from drilling for oil. A lot of that gas comes from conventional oil wells, not shale. Yes, these companies can make a lot of money. But that does not mean that the shale gas producers who get a bit of liquids can make it with prices as low as they are. With petroleum selling for $90 a barrel, drillers in places like the Eagle Ford shale or the Bakken can give away their natural gas for nothing and still make 100% annual returns on their drilling dollars. -- ForbesShow me the 10-K forms that tell me that shale gas is profitable. (And when you do make sure that you are not just looking at the production cost, which is a fraction of the total.)Technology development and application are and will remain key elements in maximizing the full value of these large, long-life resources. Here are some examples: Unconventional production from Haynesville increased four-fold in 2010, while production in Fayetteville doubled in 2010. The Barnett Shale, where we currently have gross production of approximately 900 million cubic feet per day of gas, is another good example of value creation through technology. We have been able to maximize long-term ultimate recovery with longer lateral lengths and improved drilling and completion efficiency. And our net unit development cost in this shale play is about $1 per thousand cubic feet equivalent, a 50 percent improvement in the last five years ..." -- ExxonMobileWhat exactly is meant by net unit development cost? What happens when you include all of the other costs? Does this cost include the full depreciation or is Exxon using the overstated reserve estimates and the high EURs that have yet to be seen in the real world?And surely if shale gas were this profitable the pure shale gas players would be swimming in cash. But if that were true why are they swimming in read ink instead and trying to sell themselves off or find new credit lines.


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