DES MOINES, IA – Despite a rough 2009, the U.S. Energy Information Administration (EIA) said that ethanol demand and the ethanol industry "may have a smoother ride this year," the Des Moines Register reports.
The EIA reports that gasoline consumption dips in 2008 and 2009 will likely be reversed this year as the economy improves, which in turn will boost demand for biofuels. It said that the rising requirements of the federal renewable fuels standards would also assist the industry.
“Ethanol production continues to grow to meet the volume requirements of the Renewable Fuel Standard from 11.1 billion gallons in 2009 to 12.95 billion gallons in 2010," the EIA said.
California, the nation's largest fuel consumers, is raising its mandatory biofuel blend from 5.7 percent to 10 percent, which is also projected to spike ethanol sales. Usage could grower further if the Environmental Protection Agency approves an increase in the allowable fuel blend in conventional vehicles from the current level of 10 percent to 15 percent.
The report revealed that most ethanol plants in the U.S. lost money during the first half of 2009, and that their average margins improved to roughly 40 cents per gallon in the second half of the year as demand increased and corn prices fell.