August Ethanol Production, Imports and Stocks Up

August ethanol production ended higher with 842,478,000 gallons produced, up from 799,764,000 gallons produced in July.



Ethanol imports were up with 81,102,000 gallons imported in August versus 57,120,000 gallons in July.



August ethanol stocks ended higher at 625,044,000 gallons compared to 553,812,000 gallons in July.

Ethanol Production Numbers in Gallons
	Production	Imports	Stocks	Consumption
August 2008	842,478,000	81,102,000	625,044,000	852,348,000
July 2008	799,764,000	57,120,000	553,812,000	819,840,000
June 2008	736,848,000	65,982,000	516,768,000	791,910,000
May 2008	778,806,000	36,372,000	505,848,000	793,968,000
April 2008	708,456,000	60,942,000	484,638,000	763,182,000
March 2008	730,674,000	15,456,000	478,422,000	707,238,000
February 2008	631,050,000	20,286,000	439,530,000	660,114,000
January 2008	664,356,000	20,790,000	448,308,000	679,308,000
December 2007	636,762,000	8,904,000	442,470,000	674,352,000
November 2007	602,592,000	16,506,000	471,156,000	628,800,000
October 2007	588,756,000	41,916,000	480,858,000	635,124,000

Source: - Energy Information Administration

Iowa State Studies Effects Of Ethanol Subsidies

Iowa State Researchers have been studying the effects of ethanol subsidies on the the welfare of producers and consumers as well as as on the fuel market. They looked at the effects of the 51 cent ethanol blenders credit, the 54 cent ethanol import tariff and the ethanol mandate. After adding all the pluses and minuses they concluded the overall results of the ethanol policy have been positive.

Ethanol production in 2007 provided a benefit to corn, ethanol producers, gasoline/fuel consumers, and taxpayers. It reduced welfare for grain consumers and gasoline refiners. The overall net welfare gain is approximately $2.65 billion.

This came as somewhat of a surprise since subsidies generally create market distortions but in this case they concluded that it reduced market distortions that already existed as a result of farm subsidies.

Government support policies coupled with high energy prices stimulated a rapid increase in ethanol production and associated welfare transfers in multiple markets. We find that the net welfare change of the U.S. ethanol subsidy is positive. This result is counterintuitive because the first fundamental theorem of welfare economics would suggest the market-distorting ethanol subsidy could not be welfare enhancing. The markets for agricultural commodities, however, were not competitive prior to large-scale ethanol production because there was already significant intervention in the form of farm subsidies. Our results show that subsidizing U.S. ethanol production actually does improve aggregate welfare, a result that is robust with respect to a reasonable range of alternative parameter values. By reducing the distortion from farm payments in agricultural commodity markets, the ethanol subsidy—even though market distorting itself—reduces net distortion.

Source : Ethanol: A Welfare-Increasing Market Distortion?

July Biodiesel Production Reaches New High

July biodiesel production hit a new high with 67 million gallons produced.

July 2008 - 67,000,000 gallons
June 2008 - 63,000,000 gallons
May 2008 - 52,000,000 gallons
April 2008 - 53,000,000 gallons
March 2008 - 49,000,000 gallons
February 2008 - 43,000,000 gallons
January 2008 - 51,000,000 gallons

2007 - 490,000,000 gallons

Source : EIA : Biodiesel Overview

Ethanol no longer seen as big driver of food price

Reuters has an interesting article on ethanol and food prices in light of recent declines in corn prices.

Heavy demand for corn from ethanol makers was seen as a key driver of corn futures to record highs in June, but since then the sharp decline of corn along with other commodities shows that belief was mistaken.

Instead they say that commodity prices were pushed up primarily by speculation.

Analysts said soaring corn prices were a symptom of big shifts of investment money into corn and other commodities. As big money began shifting out of stocks a few years ago, commodity markets like corn futures began climbing.

"There was a speculative bubble in the market and that's one of the bigget things that came out of the market is just that equity markets weren't good and for a while the money came into commodities," Ramsay said.

Given the fact that corn prices are falling even while ethanol production is continuing to increase, all the signs suggest that ethanol wasn't the main driver for the high prices seen during the summer. This article is the first that I have seen that points this out.

Source : Reuter

School District Celebrates 10 Years Of Biodiesel Use

The Medford, NJ school district celebrated 10 years of using biodiesel in it's school bus fleet. According to the release the Medford school district was the first school district to start using biodiesel. Now it is estimated that approximately 200 school districts use biodiesel.

According to Medford Township Public School System officials, over the past decade the district’s school buses have traveled more than 4 million miles, consumed more than 615,000 gallons of B20, displaced more than 123,000 gallons of diesel fuel, and eliminated 127,000 pounds of hazardous emissions and 428 pounds of particulate matter while reducing the overall cost of fleet operations by $80,000 a year.

My hat goes off to them for their willingness to pioneer the early use of biodiesel.

Source : National Biodiesel Board

Iowa E85 Sales Accelerating

The Iowa Renewable Fuels Association has announced that according to the Iowa Department of Revenue statistics E85 sales for the first half of 2008 totaled 3.5 million gallons. That compares with 3.4 million gallons of E85 sold in all of 2007 and 2 million gallons in 2006.

Since the first of the year, Iowa has added 20 new E85 refueling locations that have helped to accelerate the growth in sales. E85 sales in the first quarter of 2008 totaled 1.3 million gallons. Sales in the second quarter jumped to 2.2 million gallons.

Source : Ethanol Producer Magazine

Kinder Morgan Says Ethanol Pipeline Test Successful

Kinder Morgan reports that ethanol test runs through it's 106 mile Central Florida pipeline stretching from Tampa to Orlando have been completed successfully.

The project to convert this existing 16 inch gasoline pipeline to carry ethanol began in March 2008 and cost 3.5 million to complete.

Kinder Morgan says that client shipments of ethanol will begin in mid-November.

Source : Houston Business Journal

June Biodiesel Production Hits New High

Biodiesel production reached an all time high in June with 63 million gallons of biodiesel produced.

June 2008 - 63,000,000 gallons
May 2008 - 52,000,000 gallons
April 2008 - 53,000,000 gallons
March 2008 - 49,000,000 gallons
February 2008 - 43,000,000 gallons
January 2008 - 51,000,000 gallons

2007 - 490,000,000 gallons

Source : EIA : Biodiesel Overview

Biodiesel Refueling Locations Total 1018

For some time I have posted the number of E85 stations at the first of every month. In doing so it has given me the opportunity to see how the growth in locations has progressed over time.

Now I would like to start doing the same thing with biodiesel locations. Things are a little more complicated for biodiesel though. After looking around quite a bit the list maintained by the National Biodiesel Board (NBB) seems to be the most accurate. I base this on the knowledge that one distributer in my area recently decreased the number of locations offering biodiesel from three to one. The list maintained by the NBB was the only one that reflected that change. The NBB publishes the list but doesn't note the total anywhere that I am aware of. So to get a total I loaded the list in a text editor and counted the lines. Since each entry covers three lines the math for figuring out the number of total locations was easy enough.

So with that said, I have the starting point and will update the number periodically to see how the list grows.

October 11, 2008 - 1018

Please note that this number includes all biodiesel blend levels. For a complete list or to find locations nearest to you please visit the National Biodiesel Board.

Ethanol Blender Pumps Total 84

The American Coalition for Ethanol's blog Ethanol. Right. Now. is reporting that the number of ethanol blender pumps across the country have reached a total of 84. Blender pumps allow drivers of flex fuel vehicles to choose from several different levels of ethanol concentration such as E20, E30, E50 as well as E85.

After compiling the list of blender pump locations, they plotted the locations on a map which can be seen at:

Blender Pump Locations Map

Source : Ethanol. Right. Now

DOE Reports Intermediate Ethanol Blend Test Results

Since August 2007, the Department of Energy (DOE) has been testing intermediate ethanol blends, primarily E15 and E20 in conventional vehicles and smaller off-road engines to determine possible impacts on durability, drivability, and emissions. The tests were conducted on 13 popular late-model vehicles and 28 small non-road engines, including lawn equipment and generators.

Vehicle results include the following when E15 and E20 were compared with traditional gasoline:

• Tailpipe emissions were similar;
  
• Under normal operations, catalyst temperatures in the 13 cars were largely unchanged;
  
• When tested under full-throttle conditions, about half of the cars exhibited slightly increased catalyst temperatures with E15 and E20, compared to traditional gasoline; and,
  
• Based on informal observations during testing, drivability was unchanged.
  

Small non-road engine results include the following when E15 and E20 were compared with traditional gasoline:

• As ethanol content increased:
  
  • Regulated emissions remained largely unchanged,
    
  • Engine and exhaust temperatures increased;
    
• Engine performance was inconsistent, even with traditional gasoline;
  
• Commercial engines, as well as more sophisticated residential engines, exhibited no particular sensitivity to ethanol from a durability perspective; and,
  
• The effect of E15 and E20 on the durability of smaller, less expensive residential engines (e.g., line trimmers) was not clear given that a number of these engines failed regardless of fuel type.
  

Source: DOE Press Release

Ethanol Production Rising, Corn Prices Falling

The University Of Illinois Extension had an interesting post the other day.

In the past 90 days Dec corn has dropped over $3 and Nov beans have dropped over $6.50 per bu. and marketing specialist Mike Woolverton at Kansas State says supply and demand fundamentals had almost nothing to do with it. He says it was all a function of the financial markets, because of the housing bubble and the subprime mortgage issues.

The financial companies which assumed the risk in those troubled areas also ran hedge funds and index funds, and Woolverton says when they were unable to liquidate mortgage assets, they had to get cash by offsetting futures and options contracts at large losses. That took billions of dollars out of the commodity market, reducing grain prices.

December corn futures closed the day at $4.24 per bushel on CBOT.

The thing that strikes me about this is that ethanol production is still rising while corn prices are going down in a rather dramatic fashion. And while the critics of ethanol would have us all to believe that ethanol was the sole cause for high corn prices and high food prices this seems to show that speculation was a large part of the problem.

But regardless of the reasons for falling corn prices, since we have been told that egg, milk, beef and chicken prices among others were rising because of high corn prices, shouldn't we be seeing these prices come back down?

USDA Studying New Sugarcane Varieties For Ethanol Production

The USDA's Agricultural Research Service (ARS) has been researching new sugarcane varieties that produce higher levels of sugar and fiber for ethanol production.

Agricultural Research Service (ARS) scientists, in cooperation with the Louisiana Agricultural Experiment Station (LAES) and the American Sugar Cane League, USA (ASCL), have already released three new varieties of "energy sugarcane." They're called that because of their high stalk contents of sugar and fiber, which could eventually serve as complementary ethanol feedstocks.

This particular research is geared towards crops that can be grown for energy production in southern Louisiana but the researchers are also working on cold tolerant sugarcane varieties that can be grown farther north.

Source : Agricultural Research Service

Number Of E85 Stations Continues to Climb

For the month of September, 39 new E85 refueling locations were added bringing the total to 1782 heading into October.

October 1, 2008 - 1782
September 1, 2008 - 1743
August 1, 2008 - 1663
July 1, 2008 - 1627
June 1, 2008 - 1579
May 1, 2008 - 1560
April 1, 2008 - 1521
March 1, 2008 - 1501
February 1, 2008 - 1475
November 9, 2007 - 1378
May 7, 2007 - 1200

The current number plus the locations of all E85 stations can be found at the National Ethanol Vehicle Coalition.