Ethanol prices soared as Americans returned to the roads this summer. After hitting historic lows during the depths of the pandemic, traffic on the country’s streets and highways climbed 12% so far this year.
Crain's Chicago Business reports the higher demand has been a boon to an ethanol industry plagued for years by excess capacity that depressed prices and squeezed profits. After sinking as low as 83.6 cents/gallon in April 2020, near-term ethanol prices at the Chicago Board of Trade leapt 45% to $2.21 this year.
Some portion of the recent upturn reflects pent-up demand from the pandemic. Driving likely will normalize over the next year or so, potentially bringing down ethanol demand and prices.
Successful lobbying could extend ethanol’s current boom and help preserve its viability as an auto fuel during the transition to electric-powered cars. But eventually EVs will be so prevalent that demand for gasoline and the ethanol it contains will start falling sharply.
Some are already moving in that direction. ADM, for example, is converting most of its ethanol production capacity to produce clean-burning jet fuel.
Read the full report at Crain's.
