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The Renewable Fuel Standard program was designed by U.S. legislators to curb carbon emissions in transportation fuel. The program sets minimum requirements for refiners to produce transportation fuel using renewable sources. One of the main sources of renewable volume requirements is ethyl alcohol, commonly known as ethanol. Ethanol is produced by fermenting plant material, such as corn, sugar cane, or grasses.
The Producer Price Index (PPI) for ethanol measures the change in prices received by ethanol producers for the sale of their products. In 2006, the index jumped 24.8 percent after the implementation of Renewable Fuel Standard 1 (RFS1) in 2005, reflecting a surge in demand.
Month | Producer Price Index for ethanol |
---|---|
Jan 2005 |
100.0 |
Feb 2005 |
100.8 |
Mar 2005 |
101.3 |
Apr 2005 |
94.2 |
May 2005 |
93.4 |
Jun 2005 |
94.0 |
Jul 2005 |
97.9 |
Aug 2005 |
102.4 |
Sep 2005 |
112.2 |
Oct 2005 |
111.8 |
Nov 2005 |
104.8 |
Dec 2005 |
103.0 |
Jan 2006 |
101.7 |
Feb 2006 |
105.8 |
Mar 2006 |
109.1 |
Apr 2006 |
122.9 |
May 2006 |
126.3 |
Jun 2006 |
147.3 |
Jul 2006 |
152.2 |
Aug 2006 |
141.7 |
Sep 2006 |
131.2 |
Oct 2006 |
119.1 |
Nov 2006 |
122.8 |
Dec 2006 |
137.5 |
Jan 2007 |
139.2 |
Feb 2007 |
134.0 |
Mar 2007 |
141.0 |
Apr 2007 |
142.0 |
May 2007 |
142.4 |
Jun 2007 |
140.1 |
Jul 2007 |
137.9 |
Aug 2007 |
134.3 |
Sep 2007 |
128.6 |
Oct 2007 |
123.7 |
Nov 2007 |
126.9 |
Dec 2007 |
129.2 |
Jan 2008 |
133.1 |
Feb 2008 |
135.5 |
Mar 2008 |
139.1 |
Apr 2008 |
143.6 |
May 2008 |
146.4 |
Jun 2008 |
149.6 |
Jul 2008 |
161.1 |
Aug 2008 |
160.9 |
Sep 2008 |
157.9 |
Oct 2008 |
147.6 |
Nov 2008 |
149.3 |
Dec 2008 |
139.5 |
Jan 2009 |
133.0 |
Feb 2009 |
127.2 |
Mar 2009 |
129.9 |
Apr 2009 |
128.8 |
May 2009 |
132.1 |
Jun 2009 |
133.4 |
Jul 2009 |
134.3 |
Aug 2009 |
129.8 |
Sep 2009 |
127.0 |
Oct 2009 |
125.0 |
Nov 2009 |
120.3 |
Dec 2009 |
128.0 |
Jan 2010 |
120.4 |
Feb 2010 |
117.2 |
Mar 2010 |
113.5 |
Apr 2010 |
107.5 |
May 2010 |
105.1 |
Jun 2010 |
105.9 |
Jul 2010 |
108.3 |
Aug 2010 |
113.5 |
Sep 2010 |
123.8 |
Oct 2010 |
129.6 |
Nov 2010 |
143.8 |
Dec 2010 |
131.9 |
Jan 2011 |
141.7 |
Feb 2011 |
147.5 |
Mar 2011 |
149.8 |
Apr 2011 |
161.1 |
May 2011 |
164.4 |
Jun 2011 |
165.9 |
Jul 2011 |
166.2 |
Aug 2011 |
179.2 |
Sep 2011 |
176.6 |
Oct 2011 |
155.8 |
Nov 2011 |
163.3 |
Dec 2011 |
160.3 |
Jan 2012 |
147.2 |
Feb 2012 |
141.2 |
Mar 2012 |
141.7 |
Apr 2012 |
142.6 |
May 2012 |
140.4 |
Jun 2012 |
134.8 |
Jul 2012 |
145.6 |
Aug 2012 |
159.0 |
Sep 2012 |
158.9 |
Oct 2012 |
153.2 |
Nov 2012 |
146.1 |
Dec 2012 |
147.7 |
Jan 2013 |
144.6 |
Feb 2013 |
152.4 |
Mar 2013 |
154.6 |
Apr 2013 |
159.4 |
May 2013 |
163.8 |
Jun 2013 |
170.0 |
Jul 2013 |
158.6 |
Aug 2013 |
152.1 |
Sep 2013 |
154.4 |
Oct 2013 |
138.0 |
Nov 2013 |
128.3 |
Dec 2013 |
140.9 |
Jan 2014 |
139.6 |
Feb 2014 |
129.8 |
Mar 2014 |
143.2 |
Apr 2014 |
172.6 |
May 2014 |
147.4 |
Jun 2014 |
147.4 |
Jul 2014 |
141.0 |
Aug 2014 |
138.0 |
Sep 2014 |
141.6 |
Oct 2014 |
114.6 |
Nov 2014 |
122.0 |
Dec 2014 |
143.4 |
Note: The Environmental Protection Agency administers the Renewable Fuel Standard (RFS) program, setting minimum requirements for refiners to produce transportation fuel using renewable sources. RFS1 occurred in 2005; RFS2 occurred in 2007 and implementation a year later. Source: Bureau of Labor Statistics. |
Driven by tax credits and blending mandates, refiners sought to expand capacity in 2007. Despite the increase in capacity, the PPI for ethanol increased an additional 6.7 percent because of higher usage. The ethanol index rose 8.9 percent in 2008, following the Energy Independence and Security Act of 2007 (EISA) and the adoption of Renewable Fuel Standard 2 (RFS2) in 2007. It remained flat during the first half of 2009. However, in the latter half of 2009, the Great Recession tapered gasoline consumption, and ethanol prices decreased 12.2 percent for the year. In 2010, farmers earmarked an increasing share of corn for ethanol production, limiting the quantity available for food and feed use. As a result, ethanol prices fell 8.3 percent in 2010, while prepared animal feed prices climbed 7.3 percent. The ethanol index recovered sharply in 2011, rising 36.0 percent because of strong export demand from Brazil.
These data are from the Producer Price Indexes program. To learn more, see “What happened to ethanol producer prices after passage of the Renewable Fuel Standard?” by Wander Cedeño, Beyond the Numbers, July 2016.
Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, What happened to ethanol producer prices after passage of the Renewable Fuel Standard? at https://www.bls.gov/opub/ted/2016/what-happened-to-ethanol-producer-prices-after-passage-of-the-renewable-fuel-standard.htm (visited October 11, 2024).