This is admittedly from November, but it's the first deep-dive I've seen.

The story of the United States corn ethanol industry is a story about a sector that grew rapidly under a very specific set of policy, technology and market conditions. It filled a gap when gasoline demand was rising, when climate policy focused on incremental change, and when EVs were still a niche. It became a major part of the Midwestern political economy. It shaped land use patterns. It supported thousands of farmers and dozens of rural communities built around steady demand for transport fuel. That world is shifting and the signals point toward a twenty year horizon that looks very different from the previous twenty, with very significant implications for the Midwest’s economies and likely politics.

Corn ethanol grew from a small program focused on oxygenates into a national industry producing over 16 billion gallons annually, about 48 million metric tons. The Renewable Fuel Standard created guaranteed demand by requiring refiners to blend increasing amounts of ethanol into gasoline. Direct subsidies through the Volumetric Ethanol Excise Tax Credit helped expand capacity. By the late 2000s the industry had become large enough to hold political weight in Iowa, Illinois, Minnesota and Nebraska. Ethanol plants became anchor employers. Farmers gained a new buyer that consumed nearly 40% of the national corn crop. The system became predictable and self reinforcing. All gasoline sold in the country now has about 10% ethanol added, with some higher blends available in some places. Once direct subsidies expired, the mandate and a large fleet of internal combustion vehicles kept the industry stable. That stability is now being tested by structural changes in transportation and energy.

The first challenge appears in the gasoline market itself. EIA data from 2015 through 2019 shows finished motor gasoline stabilizing at roughly 140 billion gallons a year. The post pandemic rebound never reached that range again. By 2024 gasoline demand had slipped below pre pandemic levels even though the population was larger than in 2019. The shift is not a statistical quirk. Efficiency gains, hybrid penetration and improved powertrain design are pushing gasoline demand down. Even modest EV adoption affects fuel consumption more than most people expect because each EV replaces an entire household’s gasoline demand, not a small slice of it. Hybrid and work from home models that are common after COVID also inhibit demand. Gasoline peaks are rarely jagged events. They plateau and then begin slow but durable declines. Ethanol demand sits inside that shrinking pool. Rising blend rates cannot compensate if the base declines year after year.