The Coronavirus and Ethanol Demand Destruction

Research output: Contribution to specialist publicationArticle

Abstract

Extraordinary restrictions have been put in place in an attempt to slow the spread of the coronavirus in the U.S. and many other nations. The restrictions range from shelter-in-place orders to milder social distancing guidelines. The result is a contraction in economic activity unlike anything witnessed since the Great Depression. For example, the U.S. Department of Labor reported that 3.3 million people filed for unemployment benefits last week alone, dwarfing any previous level even in recessions. One implication of the virus-related restrictions is that people are driving much less than before, which means that gasoline and ethanol use are declining. The impact on the price of ethanol has been swift and severe, as shown in Figure 1. The price of ethanol at the Iowa plant level has declined $0.32 per gallon, or 26 percent, since late February. There is naturally great interest in the magnitude of ethanol demand destruction and the implications for corn ethanol use going forward. The purpose of this article is to investigate the potential level of ethanol demand destruction over the next few months and the associated impact on corn ethanol use.
Original languageEnglish (US)
Volume10
No56
Specialist publicationfarmdoc daily
Publisher Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign
StatePublished - Mar 26 2020

Keywords

  • Coronavirus
  • COVID-19
  • novel coronavirus
  • virus
  • 2019-nCoV

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