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