Alternatives To Ethanol Gather Momentum
Declining ethanol demand in the US is one of the factors behind the projected decline in ethanol production and related US corn consumption expected by our Oil & Gas and Agribusiness teams respectively in 2014. We believe that ongoing improvements to the fuel efficiency of vehicles, coupled with the growth of alternative fuels, have contributed to this trend and will continue to pose a threat to ethanol producers, particularly with more stringent Corporate Average Fuel Economy (CAFE) standards for the US on the horizon.
Fuel Efficiency A Major Threat
Although the total ethanol used in Finished Motor Gasoline increased again in 2013 to just short of 13bn gallons, according to data from the Energy Information Administration (EIA), the growth rate has slowed considerably over the last decade, rising just 0.2% year-on-year (y-o-y). Other than a decline in 2011, this was the worst y-o-y rate for the 11 years recorded. Unsurprisingly, this coincides with another record year for fuel efficiency in the autos sector as carmakers continue to make improvements before the next set of CAFE standards are implemented in 2016.
|Ethanol Use Plateaus|
|Ethanol Used In Finished Motor Gasoline (bn gallons)|