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Ethanol Mandate - No Better Time than Now
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zenfarm
Posted 9/19/2018 19:20 (#6997441 - in reply to #6997329)
Subject: RE: Ethanol Mandate - No Better Time than Now


South central kansas


  Farmdoc had a excellent article  on small Refinery Exemptions (SREs) and ethanol demand destruction. 

This is what they had to say about E15 and E85. 

 

Farmdoc article,  https://farmdocdaily.illinois.edu/2018/09/small-refinery-exemptions-and-ethanol-demand-destruction.html

 

 


    This means that, unlike E10, higher ethanol blends are not price competitive at the pump without a subsidy.  D6 RINs (in theory) provide the subsidy needed to incentivize drivers to purchase E15 and E85, and therefore, the demand for higher ethanol blends above the E10 blend wall depends on D6 RIN prices.  If SREs drove D6 RIN prices below the level necessary to incentivize E15 and E85 consumption, then demand for this segment of physical ethanol consumption would be reduced by SREs.  A recent study by Lade, Pouliot, and Babcock (2018) suggests this is precisely what happened.  However, consumption of E15 and E85 is so small and difficult to measure that it barely registers in the aggregate statistics on physical ethanol consumption.  With at most a few hundred million gallons of ethanol consumed in E15 and E85, cutting demand in this segment has little overall effect.



Edited by zenfarm 9/19/2018 19:24
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