WASHINGTON, DC, US — The US ethanol industry is set to lose $10 billion in sales due to the coronavirus (COVID-19) pandemic and a crude oil glut and nearly 50% of production is currently offline, according to an analysis by the Renewable Fuels Association (RFA). 

“Roughly half of the ethanol industry is shut down today, as fuel demand has collapsed in response to COVID-19, and it is clear we have a long and bumpy road to recovery ahead of us,” said Geoff Cooper, president and chief executive officer of the RFA. “Corn demand and prices have plummeted as plants have idled, jobs are being lost, and rural communities are being destabilized.”

Social distancing and stay-at-home orders have dramatically reduced fuel consumption, and thus ethanol consumption. Ethanol use is down 50% compared to this same time a year ago.

At the same time, a glut in oil caused prices to plummet steeply on April 20 with a barrel of oil dropping to negative territory.

In response to declining usage, ethanol production could drop by 3 billion gallons for the year as a whole, a nearly 20% reduction.

As of April 20, about 70 ethanol facilities with an annual production capacity of 6.1 billion gallons have been completely idled and nearly 70 more have reduced their operating rates by a combined 1.9 billion gallons. In total, at least 46% of total production capacity is offline, and only one-third of facilities are operating anywhere close to capacity, the analysis said.

“This cutback is unprecedented in its depth and speed,” the RFA said.

Ethanol prices are also down. Spot prices in Chicago have fallen from $1.40 per gallon at the end of 2019 to 85 per gallon in early April.

“With ethanol inventories rising to record levels and the expectation that consumption will be slow to return, ethanol prices are likely to continue to be suppressed in the coming months,” the RFA said.

The combination of lower production and falling prices is expected to cause ethanol sales to plummet by $10.5 billion, or 46%. These impacts will have ripple effects throughout the broader US economy, notably in the agriculture sector, the RFA said.

Follow our breaking news coverage of the coronavirus/COVID-19 situation.