The ethanol industry faced several major challenges in 2012. First, a weak economy and high oil prices resulted in a decline in motor gasoline demand and, by extension, lower ethanol demand; the ethanol industry ran up against the E10 blend wall; and the industry was faced with soaring feedstock prices. Early-season expectations for a record corn crop and reasonable feedstock prices were dashed by the most severe drought in decades that resulted in a 16 percent decline in yields. Despite the

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... gest number of corn acres planted in more than 50 years, corn production for the 2012-13 marketing year fell nearly 13 percent resulting in record corn prices. Reflecting these challenges, total ethanol production nationally fell nearly 5 percent to an estimated 13.3 billion gallons. 1 According to the Renewable Fuels Association, at year's end the ethanol industry comprised approximately 211 plants in 28 states with nameplate capacity of 14.7 billion gallons and operating at an annualized rate of 13.1 billion gallons. At year's end about 158 million gallons of new capacity were under construction. However, reflecting declining profitability, the number of operating plants and operating rates fell, particularly during the second half of the year. This study estimates the contribution of the ethanol 1 The 13.3 billion gallon estimate is based on annualized year-to-date ethanol production reported by the Energy Information Administration.