By Scott Richman, Chief Economist
On the first anniversary of the Energy Information Administration adding ethanol export estimates to its Weekly Petroleum Status Report, U.S. exports and total usage of ethanol hit record highs. Prior to May 2023, EIA’s flagship weekly fuels report gave an incomplete picture of ethanol supply and demand, and market participants had to wait for monthly Census Bureau releases to get reliable export data. RFA was instrumental in engaging with EIA about making this addition to the WPSR.
Ethanol exports were 62.3 million gallons last week. Not only was this the highest level since EIA began reporting estimates last year, but it also exceeded the maximum weekly pace implied by monthly Census export data prior to that.
Additionally, U.S. refiner and blender net inputs of ethanol, a measure of ethanol usage that accounts for approximately 97% of EIA’s final consumption estimate, were 275.5 million gallons. For the second straight week, net inputs were at their highest level since the week leading up to Independence Day 2021.
On an annualized basis, the combined pace of exports and domestic usage was 17.7 billion gallons – by far a record. The previous high-water mark, set in December, was 16.8 billion gallons.
Implied demand for gasoline was strong in the runup to Memorial Day, the start of the summer driving season. AAA projected that 38.4 million people would travel by car over the holiday weekend, the most since the association began its travel forecast in 2000. However, this doesn’t explain all the strength in ethanol usage.
As reflected in RFA’s Weekly Ethanol Production report, net inputs have been running above 10% of implied gasoline demand. The wholesale price of ethanol has been substantially lower than that of petroleum gasoline blendstock—a discount of as much as $1.20 per gallon on a national average basis in April, according to OPIS. Additionally, since mid-April prices of renewable identification numbers (RINs), the credits used for compliance with the Renewable Fuel Standard, have rallied from multiweek lows, and the rally has picked up steam over the last few weeks.
This has resulted in strong ethanol-blending economics. As of Friday, the national average retail price of E15 (a 15%-ethanol blend) is $0.36/gallon, or 10%, lower than that of E10 regular unleaded gasoline, according to e15prices.com.
In summary, the summer is off to a good start for ethanol. Exports and overall usage are at record levels, and blending economics are solid. AAA noted that its Memorial Day travel forecast “signals a very busy summer travel season ahead.” Plus, USDA indicated in its latest Crop Progress report that 83% of corn acreage had been planted as of Sunday, which is in line with the five-year average after rapid progress over the last two weeks. Given favorable market conditions, hopefully ethanol’s positive momentum will continue throughout the summer.
