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Expert says ethanol demand more likely influenced by coronavirus than oil price plunge

An ethanol expert says the disagreement between OPEC and Russia over oil production and prices is not as big of a threat to ethanol as the coronavirus.  Ron Lamberty with the American Coalition for Ethanol tells Brownfield lower demand for motor fuel because less travel by consumers is a greater threat to ethanol producers and farmers, as the Renewable Fuel Standard still requires ethanol blending. “Most of them are buying corn, so the corn price is going to stay where it stays as long as they need to keep buying it but, yeah, a prolonged drop in buying fuel is going to affect ethanol, too.”

Lamberty says even with large recent oil price drops, he expects ethanol use to follow overall fuel demand. “As long as people are using it, then the fact that the oil price portion of it is less expensive, the price of ethanol is still less than the price of gasoline today.”

Lamberty says tough times have already prompted ethanol refiners to sell byproducts like corn oil, distiller’s grains, and carbon dioxide. “They’ve gotten a lot more efficient over the last few years so hopefully if it’s not another long storm, they can whether it.”

Lamberty says the combination of coronavirus and an oil price war might lead to more gasoline and ethanol use and less air travel.  He also says the advantage ethanol has over oil is high octane value, which should keep ethanol valuable to refiners and blenders.

Markets tumbled Monday including a two-thousand-point fall on the Dow Jones Industrials and U.S. crude oil fell about 20% to $31.13 a barrel, the largest one-day drop since 1991.