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JACKSON, Neb. -- Consumers are reaping a financial windfall as gas prices dip lower and lower. But the development is not necessarily good news for producers of corn-based ethanol.

Some ethanol producers have been pinched in recent months by low oil prices, which have put downward pressure on the ethanol market, said Monte Shaw, the executive director of the Iowa Renewable Fuels Association. 

An abundant corn harvest this fall, a seasonal weakening in demand for motor fuels after the summer driving season, and the loss of exports due to the U.S. trade war with China, has created a glut of ethanol.

"Ethanol margins have been not very good for several months now," Shaw said.

The NASDAQ stock exchange on Thursday listed gasoline commodity futures at around $1.34 per gallon and ethanol futures at around $1.27 per gallon. Prices for both fuels have slumped since October, when the NASDAQ indexed gas above $2.10 per gallon and ethanol futures at around $1.36 per gallon.  

In Sioux City, a gallon of regular unleaded was selling for as low as $1.82 per gallon Thursday.

Regular unleaded is a blend of 90 percent oil and 10 percent ethanol. 

With demand down and supplies up, an estimated 20 percent of the U.S. ethanol capacity is now off line, as some plants have close and others have been idled.

Last fall, Omaha-based Green Plains idled until further notice its ethanol plant near the Northwest Iowa town of Superior, the Reuters news service reported, citing three industry sources. In a report to investors, the company cited trade barriers in selling its products overseas. 

“Government actions abroad can significantly impact the demand for U.S. ethanol,” the company said in the report.

Joe Williams, manager for the Plymouth Energy LLC, said its Merrill, Iowa, ethanol plant also has had to lower ethanol production due to depressed prices. 

The company, though, has started exporting ethanol to the Philippines, citing a small price advantage in the southeastern Asian country, compared to the domestic market. 

Pam Miller, the board chair and director of industry and investor relations at Jackson, Nebraska-based Siouxland Ethanol, LLC, said the 80-million gallon plant has not dialed back its operations significantly -- in fact, they remain at record production rates.

Still, Siouxland Ethanol, like all its peers, has felt a bit of a sting from the falling prices. 

"It affects our bottom line a little bit," Miller said. But, she added, it's not a catastrophe: "In the commodity world, you have times when things go a little lower than what you'd like, then it comes back up." 

In the current market conditions, Shaw said that, based on his previous observations, he'd expect some plants to dial back their production levels. 

"When you're running an ethanol plant, you can run it for maximum gallons, and in doing so you lose a little bit of efficiency, but if the margins are good you want to sell the gallons," he said.

Input costs -- from electricity to enzymes -- are higher when they're churning out the highest possible amount of ethanol. Shaw used an engine analogy: a car engine may have the capacity to go very fast, but at the expense of reduced fuel economy. The same principle applies to ethanol plants. 

"The plants can also be dialed in to be high-efficiency," he said. "Now, maybe you're not going to produce quite as many gallons as you would have if you were focused on total gallon production, but when markets are tight like they are now, it would be very common for plants to dial back a little bit to focus on efficiencies." 

Though ethanol only trends slightly lower than gasoline on a per-gallon basis at the moment, Shaw said ethanol is still, by far, the cheapest way for refiners to boost octane content in their gasoline. Petroleum-based aromatic compounds that boost the octane rating of gasoline, including benzene, toluene and xylene, remain more costly. 

"Ethanol is still the cheapest source of fuel octane out there in the world today," he said. 

Miller said she remains optimistic about ethanol's future, saying it will probably trail gasoline prices upward this summer. She's also pleased about President Trump's October announcement that the Environmental Protection Agency will allow year-round sales of E-15, a blend of 85 percent gas and 15 percent ethanol.

She also is hopeful that China and the U.S. will reach an agreement on their trade dispute, and China will scrap its tariffs on U.S. ethanol.

"There is virtually no ethanol going to China from the U.S., and that's a billion gallon market," Miller said. 

Correction: An earlier version of a photo caption in this story misidentified the type of grain shown. It is distillers grain. 

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