New Study on US Ethanol Demand
and Potential Market Values

Ethanol supplies are growing at a rapid pace, and US ethanol capacity is expected to more than double from 4 billion gallons per year in 2005 to 8 billion gallons per year (or more) by 2008.  Since 2008’s renewable fuel supplies will far exceed minimum regulatory requirements ( 5.4 billion gallons per year ), future ethanol prices are expected to be determined by a competitive marketplace based on its marginal value for further expanding gasoline supplies.  Economics dictate that ethanol’s incremental value relative to gasoline will have to decrease to expand demand to match the growing ethanol supplies.  The study addresses key questions for which most ethanol investors, producers, and blenders need answers.

 

§        How does ethanol’s marginal value change relative to gasoline price as ethanol supplies increase?

§        What is the US “value versus demand” relationship for ethanol in gasoline?

§        How much can ethanol price drop as ethanol supplies increase?

§        What happens to ethanol value if crude oil drops to $50 per barrel?

§        Can Ethanol’s future value decrease Ethanol’s “Corn Crush Margin” below investment economics?

 

For more discussion of the study available early October, click on the following link for the PDF.

Ethanol’s Demand and Market Value Study