SIOUX FALLS, SD – The ethanol industry in America is facing a disaster due to a perfect storm. That’s according to the CEO of American Coalition for Ethanol (ACE), Brian Jennings. He says it’s likely over two billion gallons of ethanol production will be lost as people aren’t driving due to the COVID 19 pandemic and social distancing. He says an oil price war has added to the woes.
“In the short-term we could see two billion gallons of ethanol production come off line. Frankly, we could see more,” says Jennings. “People aren’t driving their cars. One third of the nation’s population is under a work from home or shelter in place order.”
He continued, “And then to top things off, we have an oil price war between the Russians and the Saudi Arabians. So the fuel market has been completely eviscerated and that has destroyed demand for more gasoline and ethanol.”
He says most if not all ethanol plants are losing money and it isn’t going to get any better any time soon.
“We are talking to ethanol plants across the country. They are all, right now, worried about their work force and they all are making contingency plans; do they shut down in the coming days if they haven’t already, or do they significantly reduced production in the coming days? They’re all losing money in this depressing price situation we’re facing. Things could get quite ugly.”
Jennings says most ethanol producers were already under pressure at the beginning of the year due to the trade war and the small oil refinery waivers which had destroyed demand.
“Some of these renewable producers were hanging on by a string coming into 2020. They were suffering from EPA’s abuse of these small oil refinery exemptions under the Renewable Fuel Standards. They were suffering from trade wars,” says Jennings. “And then Russia and Saudi Arabia decide to flood the transportation market with cheap oil which drove down prices.”
Jennings says ACE is seeking any federal help they can get for short term relief for their industry.
In the long term, he notes, an economic turnaround is needed so that drivers can get back on the road and demand can pick up.
