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| No expert here and please do not take me as someone beating up on the administration. I would like to have some weigh in that have FACTS and not a political opinions. Thanks.
Why is ethanol production going offline?
Lack of demand:
SRE WAIVERS have allowed Big Oil the right to NOT blend Ethanol. This came at a time when Ethanol margins were already too tight.
Covid 19 has lowered the demand.
People have found ways to shop online.
Oil wars with Russia and Saudi Arabia.
No where to store Ethanol.
Ethanol is trading 40 cents above RBOB.
Energy market carriers:
Just like a grower and or elevator holding or carrying corn or beans. Corn normally has a better net carry after interest charges and ability to ship at anytime (liquidity).
Big oil has the tank space. Big Oil will put what ever has the best net liquid return. Today the oil wars and Covid has shifted the energy markets setup to store/carry RBOB gas and Oil.
I am trying to pull some info together on the following.
Just like a grower....when the price gets too low....you carry it.
Crude oil price has been so depressed Big oil is storing oil anywhere that is legal. Big oil bought oil on forward contracts. Big oil has their own production to deal with or carry. Ocean going tankers are being filled and again bigger carry then Ethanol and liquidity.
This leaves Ethanol in a tough spot.
If someone can ADD Value PLEASE add to this thread. Repeating....No expert here and please do not take me as someone beating up on the administration. I would like to have some weigh in that have FACTS and not a political opinions. Thanks.
Edited by 1206 Boyz 3/29/2020 08:40
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Ethanol and RBOB (gas) WHY
