Ethanol Stability Tested by Plummeting Gasoline Prices

Margin Erosion

The steep decline in wholesale gasoline prices has significantly reduced the economic incentive for fuel blending beyond minimum regulatory requirements. This lack of discretionary demand means ethanol is struggling to gain price momentum, even though mandatory RFS consumption provides a price floor.

Production and Export Balance

Production remains high, relying on strong export demand—particularly to markets like Canada and Asia—to clear surplus volumes. Any disruption to export logistics or a retreat in foreign demand would immediately intensify downward pressure on domestic prices.

Policy Outlook

While the immediate market is challenging, the long-term outlook is buffered by political efforts to increase blending mandates, such as the push for year-round E15 sales. This policy support remains the most vital factor ensuring stability for the biofuel sector.