AMES — The price of ethanol is significantly higher this month that it was in January. A gallon of ethanol was selling for $1.39 at the beginning of the year, but it’s more than doubled to above $3 a gallon this month.
Dermot Hayes, a professor of economics and finance at Iowa State University, says ethanol prices dropped significantly in 2020 as energy consumption fell due to the pandemic. “Since then, people are back driving almost as much as before,” Hayes says, “and energy prices are high, making ethanol more valuable.”
2014 was a record year for ethanol plant profits and market analysts expect 2021 will rank as the ethanol industry’s second most profitable year. Profit margins started to soar in September as the 2021 corn crop started showing up at ethanol plants and demand for ethanol rose. The U.S.D.A. estimates ethanol plants will use more than five billion bushels of corn to produce ethanol this year.