This squeeze can be seen in the “corn spread,” which measures corn’s impact on the price of ethanol. It’s the per bushel price of corn divided by 2.8 (the average number of gallons of ethanol produced from a bushel of corn) subtracted from the per gallon price of ethanol. The corn spread dropped 22 cents since early June, the EIA said. “A negative spread does not necessarily mean that producers are losing money by making ethanol since the leftover feedstock and other by-products can be sold,” the agency reported. “However, the $0.22 per gallon drop in the spread since early June has reduced profitability.”
The Renewable Fuels Association, another industry group, told NPR that 10 percent of the nation’s ethanol plants are offline, with the remainder running at 75 to 80 percent of capacity.
Meanwhile, one thing folks around the country might wonder is if this summer’s high corn prices have helped drive up gasoline prices. No, the EIA said. “Ethanol is a component of gasoline after blending; however there is little evidence of the rising corn prices affecting the current price of gasoline,” the EIA reported. “The ratio of the price of gasoline to the price of petroleum (called a crack spread) has remained relatively constant, indicating that the rise in cost of gasoline was largely due to the rise in cost of crude oil and not because of issues specifically related to the gasoline or ethanol markets.”
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