High gas prices aren’t affecting ethanol demand

In Illinois, ethanol prices haven’t risen as much as gasoline prices, consumption of the fuel hasn’t fallen as much and ethanol demand is surviving despite higher gasoline prices, which is also a good thing for grain prices, according to Allendale chief strategist Rich Nelson.

U.S. gasoline prices have increased 53 percent since last year but consumer use has only decreased 6.6 percent. Regular gasoline prices averaged US$4.77 per gallon in the United States on July 4, according to the U.S. Energy Information Administration.

As a result, gasoline use has been on a steady, albeit slow, decline over the past 16 weeks, said Rich Nelson, chief strategist of Allendale Inc.

Use is down 6.6 percent over that period compared to the same time frame in 2019, which was the last normal non-COVID driving season. Ethanol use is down only three percent by comparison.

Nelson said the statistics show gasoline/ethanol consumption is fairly inelastic because it is not cratering despite sky-high prices. People still need to get to work.