Tag Archives: ethanol

A new study shows that the Renewable Fuel Standard not only saves drivers money at the gas pump every day, but also enhances energy security by greatly reducing or even eliminating the blow to our nation’s drivers when global oil production is disrupted. The analysis confirms that the growing supply of ethanol significantly helps dampen gasoline price shocks that result from sudden oil market disruptions. If renewable fuels were removed from the fuel supply, gas prices would be more than $1 per gallon higher, the study found.
With gas prices now rising because of the recent attacks on Saudi oilfields, this research is especially relevant today, noted Geoff Cooper, President and CEO of the Renewable Fuels Association.
“This research underscores what should be common sense: We need a diverse domestic fuel supply for real U.S. energy security,” Cooper said. “We can avoid unnecessary price spikes at the pump by incorporating more renewable fuels into the nation’s fuel supply and ensuring that healthy competition exists in the marketplace.”
The study, by independent economist and energy expert Dr. Philip K. Verleger, Jr., looks at oil market disruptions over nearly 50 years and provides an example in which the availability of ethanol avoids a significant impact to U.S. gasoline prices from a supply disruption.
“Retail prices would today be above $4 per gallon, not $2.90, were renewable supplies removed from the supply mix,” Verleger writes. “The lower gasoline prices, in turn, allowed consumers to spend more on the things they wanted rather than motor fuels. … The economic benefit of lower gasoline prices that is directly attributable to the availability of renewable fuels adds one to two percentage points to the U.S. GDP every year.”
Dr. Verleger catalogs various crises and their impacts on the oil supply, from the 1973 Arab Oil Embargo to ongoing political and economic challenges in Venezuela. This week’s attack on Saudi Arabia, which took place after this report was prepared, are estimated to affect 5 percent of the daily global oil supply. When it comes to crises such as these, Verleger asserts that even “a modest amount of renewable fuels can significantly moderate the price impact of market disruptions.”
The study incorporates and builds upon a May report by Dr. Verleger that found the RFS lowered gas prices by an average of 22 cents per gallon from 2015-2018, saving the typical American household $250 annually.
Finally, Verleger looks at how the competition in the fuel marketing sector, together with the availability of renewable fuels, acts as a counterbalance to the impact of refinery consolidation on supply and pricing. “Consumers would likely pay even higher prices if the mergers that created the large oligopolistic independent refiners had not been accompanied by a second trend: the creation of an aggressive, competitive petroleum marketing sector,” Verleger writes.
Drone attacks Saturday in Saudi Arabia destroyed oil fields and caused a record spike in oil prices overnight, again calling into question claims that increased U.S. oil production has made America energy independent. The following is a statement from Renewable Fuels Association President and CEO Geoff Cooper:
“The crude oil and gasoline price spikes following the attacks on Saudi Arabia show once again that the Unites States cannot simply frack its way to energy independence. Even with growth in domestic oil production, $18 billion flowed out of the U.S. economy to Saudi Arabia last year in return for 330 million barrels of petroleum. What the oil industry doesn’t want you to know is that the United States imported 2.8 billion barrels of crude oil last year, equivalent to 45 percent of the oil processed by U.S. refineries. In fact, California imports nearly 60 percent of the oil it uses from outside the U.S., and nearly half of this imported crude comes to California via the Strait of Hormuz.
“Diversification of our liquid fuel supply is the only way to truly insulate American consumers from the volatility and price shocks that plague the global petroleum market. The good news is we have a solution right here in America’s farm fields and rural communities. Our nation’s ethanol industry produced more than 380 million barrels of lower-cost, cleaner-burning renewable fuel last year—more barrels than we imported from Saudi Arabia. And we can do more. With the faithful enforcement of the Renewable Fuel Standard, removal of arcane and unnecessary regulatory barriers, and a rapid transition to 15% ethanol blends nationwide, U.S. ethanol producers could quickly ramp up production and help fill the void in the global liquid fuel supply caused by the Saudi oil attacks.
“The hard truth is that our nation remains highly vulnerable to the geopolitical vagaries that create turmoil in the world oil market. We call on President Trump to unleash the strength and innovation of America’s ethanol industry in this time of crisis.”

President Donald Trump says his administration has made progress on a biofuel reform package after meeting with key farm-state senators late last week.

The meetings were part of an ongoing effort to boost ethanol demand to help hard-hit corn farmers. Trump is having a hard time trying to appease two key constituencies, Big Oil and Big Corn, that he hopes will help propel him to reelection in 2020. “I think we had a great meeting on ethanol for the farmers,” Trump said to reporters at the White House last week. “Let’s see what happens.” Politico says despite recent meetings, it appears the White House doesn’t intend to slow down the Environmental Protection Agency’s use of waivers that allow some refiners to ignore ethanol-blending requirements under the Renewable Fuels Standard.

It also seems as though the White House won’t offset the volumes expected to be lost to those exemptions in the annual rule. Trump is pushing a plan to add another 500 million gallons of ethanol and 500 million gallons of advanced biofuels to the 2020 blending mandate to appease farmers.

The U.S. Grains Council (USGC) in conjunction with the Nebraska Corn Board and the Iowa Corn Promotion Board will soon bring a Japanese trade team of feed milling professionals to the United States. While here, the team will visit Nebraska, Iowa and Washington to better understand the U.S. corn marketing system and pave the way for continued growth in grain, ethanol and co-product sales to the country.

The team of five, including feed milling decision makers, are in the United States to see firsthand U.S. corn, co-products and ethanol production, meeting directly with U.S. suppliers and exporters.

“Prospective corn buyers from any country want to experience every point in the value chain. That’s why the Council strives to bring buyers together with sellers to facilitate trade around the world,” said Ryan LeGrand, president and CEO of the U.S. Grains Council. “Japan has been a longstanding trading partner with the U.S. and is our second largest buyer of grains in all forms. We are excited to educate these newer, less-experienced Japanese feed corn millers, showcase major production facilities and farms in our country and demonstrate just how proud we are of the corn quality in the U.S., so we can continue to cement these relationships for U.S. farmers and Japanese end-users for years to come.”

Japan ranks as the second largest buyer of U.S. corn and U.S. sorghum, the third largest market for U.S. barley and the ninth largest buyer of U.S. DDGS.

Japan more than doubled U.S. ethanol imports to 934,000 gallons (331,000 bushels in corn equivalent) in 2017/2018, the most since 2010/2011. Using information provided by the Council, the Japanese Ministry of Economy (METI) modified its policy in 2018 to allow U.S. corn-based ethanol in the market based on technological advancements that raised the greenhouse gas (GHG) reduction level of U.S. corn-based ethanol and allowed near-term imports of ethyl tertiary butyl ether (ETBE) made with nearly 100 million gallons of ethanol.

“Nebraska has a long-standing tradition and reputation of producing quality ag products,” said David Bruntz, chairman of the Nebraska Corn Board. “We’re appreciative of Japan’s business and we’re working to strengthen this relationship well into the future. I’m excited for this group to be in our great state.”

During their time in Iowa and Nebraska, participants will visit a corn farm operation, grain elevator with a rail terminal, ethanol plant and feed mill before flying to Washington to stop in at an export terminal where they will see how grain is sampled and goes through grain inspection before making its way to Japan.

 

 

President Donald Trump says “the farmers will be so happy” when they see what the White House is doing for ethanol. On Twitter, Trump says “it will be a giant package, get ready.”

Agriculture Secretary Sonny Perdue at the Farm Progress Show this week said President Trump would announce details within the next couple of weeks. Perdue declined to offer any details, other than he pushed for easier access to higher blends of biofuels. Trump says that while the package will be welcomed by farmers, it also saved “the small refineries from certain closing.”

Ethanol groups have charged that small refinery waivers are killing demand for biofuels, because they exempt refiners from complying with volume requirements in the Renewable Fuel Standard. The Environmental Protection Agency recently announced 31 waivers for small refineries in 2020. In the last year of the Obama administration, the EPA issued seven waivers. Trump has held several White House meetings with cabinet members over the last two weeks, working a mitigation package.

The ethanol industry is asking President Trump to restore biofuel demand that was damaged by small refinery waivers. The Waivers exempt refineries from the Renewable Fuel Standard, and effectively reduce the blending targets set under the RFS, according to Growth Energy.

On Monday, the group, along with several workers from ethanol plants across the county, penned a letter to Trump asking the President to restore the demand. The letter points to the billions of gallons of “lost” biofuel demand, leading to ethanol plants idling production or shutting down. Each time a plant idles production, the letter states that “farmers are notified that biofuel producers can no longer accept grain deliveries, and the impact has been devastating for communities already on the edge.”

Farm income is now down by half since the start of this year alone, according to the Bureau of Economic Analysis. Growth Energy CEO Emily Skor says the EPA “must immediately repair the damage from abusive refinery exemptions and get lost gallons back into the marketplace.”

The Environmental Protection Agency (EPA) recently announced the exemption of 31 refineries from the Renewable Fuel Standard (RFS) biofuel-blending requirements. Yesterday, Congressman Roger Marshall, M.D., sent a bipartisan letter to the Government Accountability Office formally calling for an investigation into the granting of the Small Refinery Exemptions (SRE) and issued the following statement:

“As Co-Chair of the House Biofuels Caucus, I have a firm commitment to the Kansas farmers, renewable fuel producers, and rural communities which rely on the biofuels industry. I’ve heard from many constituents and local communities about these exemptions, and I share their concerns about the negative impact they will have on our state,” Dr. Marshall said. “Eight of Kansas’ ten ethanol plants are in the Big First District, and combined produce more than 500 million gallons of renewable fuel using corn and sorghum. This move also hurts biogas production facilities, which qualify as a cellulosic renewable fuel. Exempting these 31 small refineries from their RFS obligations – especially if they do not reallocate the renewable fuel gallons to other obligated parties – will be devastating to communities across Kansas.”

“In defense of these farmers and rural communities, yesterday, I joined a number of my Congressional colleagues in writing to the U.S. Government Accountability Office, requesting they examine and review the EPA’s approval of exemption waivers for these 31 refineries. We’re also requesting a review of the Department of Energy’s viability scores, a determination of the economic hardship on a small refinery’s compliance with the RFS, which are considered by the EPA when making exemption determinations,” Dr. Marshall said. “We need a comprehensive review of the EPA’s process for determining refinery exemptions in order to provide transparency. The biofuels industry is vital to the economic health of rural communities in Kansas. We must, at the very least, understand how these exemption determinations were reached.”

LINCOLN, Neb. – The Nebraska Corn Board (NCB) is now accepting applications to participate in its Blender Pump Grant Program. Through this program, fuel retailers have an opportunity to receive up to $50,000 to help with the installation of blender pumps capable of offering higher ethanol blends.

“With the allowance of year-round sales of E15, frequently known as Unleaded88, retailers have the unique opportunity to invest in infrastructure to offer consumers a more economical and environmentally-friendly option at the pump,” said Jeff Wilkerson, director of market development with the Nebraska Corn Board.

Blender pumps make it possible for retailers to offer multiple blends of American Ethanol. The grants can be used on the costs of the pumps themselves or other necessary equipment or hardware needed to offer higher blends of ethanol fuel. By offering increased ethanol blends, fueling stations have a competitive advantage in the marketplace and are able to better serve motorists driving flex fuel vehicles. This program does not require the retailer to upgrade all pumps in order to qualify. Awarded stations must offer two higher blends of ethanol and maintain these pumps for at least two years.

Common blends of higher ethanol include Unleaded88 (E15) which can be used year-round in all vehicles model year 2001 and newer, E30 (a 30% ethanol blend) or E85 (an 85% ethanol blend). Higher blends of ethanol above E15, such as E30 to E85, are approved for flex fuel vehicles only.

“A retailer’s cost to install a blender pump can vary dramatically, but with this grant program, we can help offset some of the costs, making the conversion process much more economical,” said Wilkerson.

More information on NCB’s Blender Pump Grant Program can be found online at nebraskacorn.gov/grantprogram. Preference will be given to areas underserved by higher ethanol blends and potential traffic flow. Applications are due by 5:00 p.m. CT on Friday, Oct. 11. Approved applicants will be notified by the end of November.

The Nebraska Corn Board is funded through a producer checkoff investment of ½-cent-per-bushel checkoff on all corn marketed in the state and is managed by nine farmer directors. The mission of the Nebraska Corn Board is to promote the value of corn by creating opportunities.

 

President Donald Trump this week asked cabinet members to appease farmers angry over small refinery waivers. Following a rash of blowback from ethanol and commodity groups, Trump held a meeting to find a solution.

Representatives from the Departments of Energy and Agriculture, along with the Environmental Protection Agency attended a two-hour meeting Monday on the subject, according to Reuters. However, no clear action has been identified so far. The EPA has received 42 requests for small-refiner exemptions for 2018, while there are only 48 classified small refineries in the United States. The waivers exempt refineries from provisions in the Renewable Fuel Standard.

Farmers argue that reallocating the exempted gallons of biofuel would be a good start in addressing the issue. The National Corn Growers Association says the waived volume now accounts for 4.04 billion ethanol gallons. NCGA President Lynn Chrisp says, “waivers reduce demand for ethanol, lower the value of our crop and undermine the President’s support for America’s farmers.”

The American Coalition for Ethanol held its annual conference in Omaha, Neb., Aug. 14-17. A DTN report says ACE CEO Brian Jennings made an interesting proclamation to the rest of his industry, which is currently on the ropes. Jennings asked members of the ethanol industry to look to the future and to not stand on the sideline while the Environmental Protection Agency continues to grant small refinery waivers to Renewable Fuels Standard requirements.

The EPA has now granted enough waivers to total more than four billion gallons of lost ethanol demand in just three years. While all that is happening, a potential 3-billion-gallon export market in China is closed to U.S. producers. That’s going on while doubt about the future of the RFS continues to grow outside the ethanol industry.

“The ethanol industry isn’t doing enough in response to quell some of those concerns. We have to turn up the volume,” he said.

The president directed USDA and EPA to review the waiver program this year, making ethanol believe Trump was aware of the problem. However, the EPA recently announced it had granted another 31 small-refinery exemptions and denied only six for 2018.

Jennings added now is the time for the industry to “get angry” and speak up about the harm the EPA is doing to an industry that would be in a much better place without the EPA’s actions.