Midwest floods hammer U.S. ethanol industry, push some gasoline prices toward five-year high

NEW YORK (Reuters) – The March floods that punished the U.S. Midwest have trapped barrels of ethanol in the country’s interior, causing shortages of the biofuel and helping to boost gasoline prices in the western United States. The historic floods have dealt a series of blows to large swaths of an ethanol industry that was already struggling with high inventories and sluggish domestic demand growth. The ethanol shortages are one factor pushing gasoline prices in Southern California, including Los Angeles, to the highest in the country, and they could top $4 a gallon for the first time since 2014, according to tracking firm GasBuddy. Benchmark price for ethanol used in most supply contracts initially jumped on news of the floods but has been hobbled by rising waters around the Chicago hub that have halted barges and sales. That stands in contrast to prices on the coasts, which rose dramatically – drawing in heavy imports from Brazil, the main U.S. ethanol competitor. The floods inflicted billions of dollars in damage to crops and homes in the U.S. Midwest, and knocked out roughly 13 percent of ethanol capacity. U.S. ethanol is made from corn and required by the government to be blended… continue reading

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