Ethanol Production Continues to Climb

Despite lower ethanol prices, ethanol use is declining. Compiled by staff

Published on: May 26, 2005

Ethanol production continues to break monthly records, with March production reaching 243,000 barrels per day (b/d), according to data released by the U.S. Energy Information Administration. However, oil company use of ethanol has slipped.

"U.S. fuel ethanol stocks at the end of March represented only 27 days of reserve, which is below the two-year average," states Renewable Fuels Association President Bob Dinneen. "However, ethanol demand lessened slightly over the first three months of the year as ethanol prices dropped 30 cents per gallon and gasoline prices increased 40 cents per gallon during the same timeframe. This is not how one would expect a market to function and it highlights the need for a robust renewable fuels standard as part of national energy legislation."

And Congress is one step closer to making the robust RFS reality Thursday with Senate Energy Committee's final approval to its comprehensive energy legislation that includes a renewable fuels standard (RFS) of 8 billion gallons by 2012. The committee’s comprehensive energy legislation was passed on a strong, bipartisan vote of 21 to 1.

The RFS included in the committee bill begins at 4 billion gallons in 2006 and increases to 8 billion gallons in 2012. It is a national program that includes flexibility for petroleum companies and numerous safeguards for consumers and air quality.

The Renewable Fuels Association states that ethanol production was up nearly 14% compared to the prior March record of 214,000 b/d in 2004. The RFA released the following statistics:

March Statistics (mg = million gallons)

Fuel Ethanol Production

315.9 mg

243,000 b/d

Fuel Ethanol Use

309.5 mg

237.7 b/d

Fuel Ethanol Stocks

275.6 mg

27 days of reserve

Fuel Ethanol Imports

8.9 mg*

n/a

*Source: U.S. International Trade Commission