Jordan Godwin: Ethanol vs. Gasoline: Implications of the New Normal
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Jordan Godwin: Ethanol vs. Gasoline: Implications of the New Normal
- 1. ETHANOL VS. GASOLINE IMPLICATIONS OF THE NEW NORMAL Jordan Godwin Platts Biofuels Analyst
- 2. THE NEW NORMAL 1. Ethanol markets stabilized -- Bumper crops -- Healthy margins -- Booming production 2. Petroleum markets crashed -- Fracking revolution -- OPEC’s decision -- Blending impact 3. Ethanol’s value redefined -- Cheapest octane booster -- Carbon emissions reducer -- 2016 predictions
- 3. ETHANOL’S BRIEF STABILITY Source: Platts
- 5. CBOB GASOLINE VS. ARGO ETHANOL -- Chicago finished gasoline discount to Chicago terminal ethanol was pivotal. -- Not just a seasonal shift: *15% spread through Jan 2015 *48% spread through Jan 2016 -- Spread could widen further *The new normal? 2015
- 6. ETHANOL PARITY VS. INCLUSION RATE 2015 201 5
- 7. CHICKEN GUMBO Natural Gasoline N-Butane LSR Isomerate Reformate Cat Naphtha Coker Naptha Hydrocrackate Alkylate Raffinate Additives Blendgrade Unleaded Mid-Grade Unleaded Premium Unleaded RBOB PBOB
- 8. SUMMER BLENDING Component % RVP Octan e $/gal July 2, 2015 Blend Cost Reformate 14 2.5 100 $2.79 39.15 Gasoline from FCC 40 10.5 83.7 $1.92 76.99 Ethanol 10 2.3 114 $1.63 16.3 Alkylate 15 5.5 93 $2.49 37.46 Butane 2 57.1 94 $0.55 1.11 Natural gasoline 14 14 73 $1.17 16.5 Raffinate 5 6 60 $1.51 7.54 Finishe d RVP 9.01 Octane 87.93 $/gal $1.95
- 9. WINTER BLENDING Component % RVP Octan e $/gal Jan 14, 2016 Blend Cost Reformate 23 1 100 $1.63 37.57 Gasoline from FCC 40 10.5 83.7 $0.96 38.48 Ethanol 10 2.3 114 $1.30 13.03 Butane 7 57.1 94 $0.46 3.22 Straight run naphtha 13 6 55 $0.90 11.73 Isomerate/isobutane 6 65 94 $0.46 2.78 Raffinate 1 6 60 $0.88 0.88 Finishe d RVP 13.34 Octane 87.25 $/gal $1.06
- 10. STILL THE ONE… FOR NOW. $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 Jan Mar May Jul Sep Nov Jan US Ethanol vs. Competing Octane Boosters Ethanol Toluene MX 2015 2016 Source: Platts
- 11. 2016 PREDICTIONS 1. Cheaper corn and higher RINs will help ethanol margins recover.
- 12. 2016 PREDICTIONS 1. Cheaper corn and higher RINs will help ethanol margins recover. 2. Oil won’t touch $20/barrel or $50/barrel.
- 13. 2016 PREDICTIONS 1. Cheaper corn and higher RINs will help ethanol margins recover. 2. Oil won’t touch $20/barrel or $50/barrel. 3. Gasoline/ethanol discount will hold, but so will the aromatics/ethanol premium.
- 14. THANK YOU! Jordan Godwin Biofuels Analyst 936.217.5069 jordan.godwin@platts.com