Farmdoc claims that "demand destruction" has not occured but the Crude/Gasoline Price rise we paid this summer was NOT SHARED with the Biofuels sector as returns were held in check given the Illegal SRE's Thanks to Senator CRUZ et all..
(too bad Beto didn't take that SOB out..)
There is widespread interest in whether small refinery exemptions (SREs) under the RFS have “destroyed” demand for ethanol in the physical market. It seems obvious that this would be the case since SREs have the effect of waiving more than a billion gallons of the conventional ethanol mandate under the RFS. However, analysis of data on ethanol and gasoline consumption in the U.S. shows there is little if any evidence that the blend rate for ethanol has been reduced by SREs. If there has been any ethanol “demand destruction” to date it was very small, perhaps a drop in the ethanol blend rate of a tenth, which equates to only about 140 million gallons of ethanol consumption on an annual basis. The reason for this counter-intuitive result is that all but a tiny sliver of ethanol in the U.S. is consumed in the form of E10 and the price of ethanol in recent months has been very low relative to gasoline. The price competitiveness of ethanol in E10 means that the conventional ethanol mandate is non-binding up to the E10 blend wall.
This finding does not preclude SREs from having an impact on ethanol demand in the future or a demand impact on other biofuels at the present time. First, if the price of ethanol increases sharply, say, due to corn supply problems at some point in the future, then ethanol could become expensive enough relative to gasoline that the conventional mandate would become binding even for E10. SREs could result in some destruction of physical demand for ethanol under this scenario. Second, SREs have in all likelihood reduced the demand for ethanol in the form of E15 and E85. While the magnitude of this impact is very small at the present time, it also means that further expansion of the demand for higher ethanol blends is not in the cards so long as SREs are granted (and not reallocated). Third, the demand for biomass-based diesel in all likelihood has been reduced in direct proportion to the impact of SREs on total obligated gasoline and diesel gallons because the biomass-based diesel mandate is highly binding. This form of “demand destruction” from SREs will be explored in a future farmdoc daily article.
The Trump administration has been talking about how they support ethanol..