You don’t have to watch the full news broadcast every night to understand the breadth of damage caused by COVID-19. Not only have a large number of people died of the virus, but it has also wreaked havoc on everything from our stock market, to our employment rates, and to consumer confidence. Unfortunately, the biofuel industry has also suffered some significant blows.
According to BloombergNEF, the biofuel industry has taken a significant hit from the pandemic as well in three major ways:
- Since most of the United States participated in “shelter-at-home” or complete “lockdowns,” the demand for gasoline dropped from mid-March through May. Since biofuel is blended with conventional fuel, when consumers purchase less of any type of fuel, biofuel demand drops as well. This lowered demand means lower prices. The demand for bio-jet fuel has also taken a steep dive as ticket sales almost came to a complete halt. According to Conde Nast Traveler, the total amount of U.S. passengers was only 5% of what it had been a year ago. While second-quarter jet fuel consumption data isn’t published yet, it’s certain to look dismal.
- Gasoline prices were already low—really low—before COVID-19 hit. Gas prices had fallen because of relations between Saudi Arabia and Russia, and as a result, Saudi Arabia had slashed prices. The national average for conventional gasoline in mid-March was only $2.15. When conventional fuel prices drop, biofuel prices must also drop to remain competitive.
- When #1 and #2 happen simultaneously, the biofuel sector needs support from policymakers to keep moving forward. Many of those policy rollouts have been delayed due to various complications and needs associated with COVID-19.
Fortunately, help is on the way. On May 4, The U.S. Secretary of Agriculture, Sonny Perdue, announced a program (the Higher Blends Incentive Program or “HBIIP”) to provide $100 million in grants for activities designed to expand the availability and sale of renewable fuels. Some of these funds can be used to pay for up to 50% of project costs for vehicle fueling facilities like gas stations and convenience stores. Other funds are dedicated to implementation activities related to higher blends of fuel ethanol and biodiesel. According to Perdue, “American ethanol and biofuel producers have been affected by decreased energy demands due to the coronavirus, and these grants to expand their availability will help increase their use during our economic resurgence.”
Want to keep up to date with what’s happening in the bioenergy sector?
The Rogue Valley Clean Cities Coalition’s mission is enhancing the livability of the Rogue Valley. We promote and educate on alternate fuels, seek to decrease dependency on petroleum, and promote clean air and water in the Rogue Valley via alternate fuels. Contact us today for more information!