US Funding Bill to Boost Ethanol Industry with Year-Round E15 Sales

The US Congress is set to include a provision in a stopgap funding bill that will allow for year-round sales of gasoline with a higher ethanol blend, marking a significant victory for corn and ethanol lobbyists. This move is expected to have a substantial impact on the ethanol industry and the broader energy landscape.

The EPA defines E15 as gasoline blended with 10.5%-15% ethanol, which is currently available in 31 states with over 3,000 stations. The expansion of E15 sales is expected to have a notable effect on corn prices, as ethanol is primarily produced from corn in the US. The impact will likely be most acute in the Midwest (PADD 2) and the Gulf Coast (PADD 3), where most ethanol is produced and consumed.



The increased demand for E15 could also impact gasoline prices and supply chains. While ethanol is generally cheaper than gasoline, the relative increase in ethanol content in gasoline could diminish refiner demand at the margin. However, the overall impact on gasoline prices may be limited, as E15 is only available in select states and its distribution network is still limited.



The expansion of E15 sales could also have geopolitical implications, potentially reducing US reliance on imported fuel. According to the EPA, E15 is roughly 25 cents/gal cheaper than E10, which could help lower pump prices and ease consumer concerns. This could potentially decrease demand for oil from energy-rich regions, such as the Middle East, reducing geopolitical tensions in the region.

However, the impact of the E15 sales expansion on global ethanol production and trade dynamics may be limited. The US already accounts for a significant portion of global ethanol production, and the expansion of E15 sales is unlikely to significantly alter the global market dynamics.

In conclusion, the US funding bill's inclusion of year-round E15 gasoline sales is a positive development for the ethanol industry. While the impact on corn prices and gasoline supply chains may be limited, the potential geopolitical implications and long-term benefits for the ethanol industry are significant. As the ethanol industry continues to grow and adapt, investors should keep a close eye on the developments in this sector.