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RFA: New University Study on COVID-19 Impacts Underscores Need for Emergency Aid

September 28, 2020

Congress, Coronavirus


As Congress and the administration continue negotiations on another potential COVID-19 relief package, a new study by university economists finds that ethanol producers will experience roughly $8 billion in losses this year due to the pandemic’s impact on world fuel markets. The study, conducted by economists from the University of Florida and Arizona State University, was published recently in the Journal of Agricultural & Food Industrial Organization.


“The COVID-19 pandemic in 2020 had a major negative impact on U.S. ethanol, gasoline, and oil prices and production,” the authors found. “COVID-19 has had a major impact on ethanol production. The producer loss due to COVID-19 is $7 billion.”


The estimated economic loss grows to a range of $7.9 to $8.6 billion when unemployment effects are included. The authors acknowledge that those estimates likely “understate the cost of COVID-19” to the ethanol industry because the impact of the pandemic on co-product output, demand and prices is not included.


Renewable Fuels Association President and CEO Geoff Cooper said the new study corroborates the findings of an RFA analysis published in July, which found pandemic-related losses could be $7 billion or more in 2020. According to RFA, the study also underscores the importance of ensuring ethanol producers are not again left out of any stimulus package that may move forward in the weeks ahead.


“This new, independent study confirms what has already been made painfully clear to the 350,000 men and women whose jobs are supported by the ethanol industry,” Cooper said. “The COVID-19 pandemic caused fuel demand to plummet and forced scores of ethanol plants to shut down, resulting in steep economic losses for the industry. While market conditions have improved since the spring, the ethanol industry is still struggling to fully recover from the pandemic, and ethanol producers across the country remain under financial stress.”


Cooper urged lawmakers and the administration to ensure emergency relief for ethanol producers is included in any forthcoming coronavirus aid deal.


“There is strong bipartisan support for providing assistance to renewable fuel producers in both the House and Senate,” Cooper said. “The HEROES Act passed by the House in May included emergency relief provisions for ethanol producers, and a similar measure was introduced in the Senate by Sens. Grassley and Klobuchar. We remain hopeful that a fourth COVID-19 aid package, with emergency relief for ethanol producers, will finally be pushed over the goal line in the weeks ahead.”


Ken Colombini