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USDA REPORTS ETHANOL PRODUCTION AND CONSUMPTION REBOUND AND LEVEL OFF AFTER PANDEMIC LOWS


Source: USDA news release

Production and consumption of ethanol as a transportation fuel (largely sourced from corn) grew significantly over the last three decades in the United States before plateauing in recent years. The ethanol share of finished motor gasoline (FMG) has moved concurrently with consumption, leveling off near 10 percent in 2022.

The Renewable Fuel Standard-which sets volumes of biofuels that must be blended with fossil fuels-influences ethanol's share of FMG, along with other factors including relative prices.

Steps taken in the spring of 2020 to combat the spread of COVID-19, such as increased remote work and school, and other social distancing efforts, resulted in sharp declines in a variety of ethanol market metrics. For example, from 2017-19, U.S. ethanol production averaged 1.33 billion gallons per month, while consumption averaged 1.18 billion gallons per month. During the pandemic lows, these values fell by 46 percent and nearly 40 percent, respectively, causing the ethanol share of FMG to decline to 9 percent.

More recently, estimates for all three figures have largely recovered and leveled off. However, increasing adoption of hybrid and electric vehicles combined with continued fuel efficiency gains in gasoline vehicles are expected to put downward pressure on gasoline consumption and dampen prospects for renewed growth in fuel ethanol demand.


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