Ethanol Industry in Trouble Amid COVID-19, Crude Oil Price War

Ethanol Industry in Trouble Amid COVID-19, Crude Oil Price War

INTL FCStone market analyst Arlan Suderman told Hoosier Ag Today last week that the ethanol industry is perhaps the most vulnerable of the ag industries right now amid COVID-19 and a crude oil price war between Saudi Arabia and Russia.

“We could see some plants have to shut down and maybe some bankruptcies,” Suderman opined.

And that is now beginning to become reality as some Indiana ethanol plants are temporarily idling or scaling back production.

Geoff Cooper, President and CEO of the Renewable Fuels Association said on a media call Thursday, “We expect to see substantial reductions in ethanol production in the weeks ahead as producers contend with lower fuel demand, record low prices, and negative margins.”

Cooper says the number one priority right now is the health, safety, and wellbeing of employees at their member facilities. That includes their job security, and RFA is asking for help from the administration to provide some level of certainty.

“We’re asking the administration to immediately announce that it will not appeal the recent Tenth Circuit Court decision on small refinery exemptions under the Renewable Fuel Standard. We’re also calling on the administration to announce that it will apply the decision nationwide. This would send a positive market signal that RFS demand will not be undermined by further small refinery exemptions, and that’s a signal our industry desperately needs today.”

Cooper believes these are reasonable requests.

“Already we’ve seen the president directed the Department of Energy to purchase millions of barrels of crude oil for the Strategic Petroleum Reserve and we know other relief measures are in the works for U.S. oil producers as well. We’re simply calling on the government to ensure that all fuel producers receive equitable support during this period of marketplace uncertainty and unrest.”

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