Sales of Ethanol-Blended Fuels

Efforts to allow year-round sales of fuel blended with 15 percent ethanol (E15) are accelerating at both the federal and state levels. At the federal level, the activity focuses on removing regulatory hurdles to offering E15 for sale during summer months. At the state level, legislation passed this year by the Nebraska Legislature requires retailers to feature E15 for sale under certain conditions. Given these activities, what is the current state of ethanol-blended fuel sales in U.S. and Nebraska?

A USDA report on market opportunities for ethanol-blended fuels says U.S. ethanol consumption has seen a dramatic increase since 2000 (Figure 1). Between 2005 and 2010, ethanol sales more than tripled due primarily to the enactment of the Renewable Fuel Standard (RFS) in 2005 which was expanded in 2007. Consumption has leveled off since 2010 but most gasoline sold in the U.S. still contains ethanol. The U.S. Department of Energy reports that more than 98 percent of gasoline sold in the U.S. contains some ethanol. Consumption of ethanol equaled 14.6 billion gallons in 2019 with an average blend rate of 10.2 percent. 

FIGURE 1. U.S. ETHANOL PRODUCTION, CONSUMPTION, & BLEND RATE

Source: Assessing Future Market Opportunities and Challenges for E15 and Higher Ethanol Blends, Office of the Chief Economist, USDA, May 2022.

Nebraska ethanol consumption parrots U.S. figures. Since January 2019, taxable sales of gasoline have averaged 75 million gallons per month according to the Nebraska Department of Revenue. Of this, 87 percent, or 65 million gallons, was an ethanol blend with a monthly penetration of ethanol-blended fuels ranging between 82-90 percent (Figure 2). Assuming ethanol fuel sold in the state is a 10 percent blend, this would equate to an average of 6.5 million gallons of ethanol sold each month. Nebraska ethanol facilities have the capacity to produce 187 million gallons per month. So, most ethanol produced in Nebraska flows out of state.

Increasing fuel efficiency and the growing popularity of hybrid and electric vehicles will reduce gasoline consumption in the future. California is requiring all new passenger vehicles sold in the state in 2030 to be zero emission. President Biden wants 67 percent of the new cars sold in 2032 to be electric vehicles. The Energy Information Agency projects gasoline consumption will decline by 19 percent through 2050. Given these happenings, ethanol consumption will decline too unless higher blends are used, or alternative uses developed. Nebraska, as the nation’s second-largest ethanol producing state, has a keen interest in boosting usage and increasing accessibility to ethanol. 

FIGURE 2. NEBRASKA MONTHLY TAXABLE SALES OF GASOLINE (JAN. 2019 – FEB. 2023)

Source: Nebraska Department of Revenue