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Renewable Accounts: Revisiting the Events of 2015

A solid economy and good crops yields are among the positives.

By David Ripplinger, Bioproducts and Bioenergy Economist and Assistant Professor

NDSU Department of Agribusiness and Applied Economics

As 2015 comes to a close, it’s natural to look back at the events and stories that shaped it. Here is my list of events in energy and agriculture that are worth remembering:

  • Low energy prices - Global production of crude oil continued to outpace consumption, building stocks and driving down prices. West Texas Intermediate prices are below $35 per barrel. In North Dakota, there has been a significant reduction in oil development activity. This is best illustrated by rig counts that have fallen to 58, down from 172 a year ago.
  • A solid economy - The U.S. economy is back on its feet. The gross domestic product (GDP) grew at an annual rate of about 3 percent in the first three quarters of 2015. The Federal Reserve finally raised interest rates by .25 of a percent in December.
  • The motoring public - Perhaps the best news of the year is that Americans are driving more. Vehicle miles traveled are increasing at an annual rate of 3 percent and fuel use is increasing at about 2 percent. This has been spurred in part by low fuel prices, confidence, increased incomes and job sites to reach.
  • Ethanol production - Domestic corn ethanol production was near capacity for the year. Ethanol has secured its place in the blend with E10. So the increased use of gasoline has meant an increase in the use of corn ethanol. Corn-ethanol crush margins also have benefited from continuing large stocks of corn.
  • Another good crop - Even with fewer acres planted, the total size of the corn crop was large. Stocks remain high and prices low as there are only so many homes for corn. As mentioned, the ethanol industry is doing what it can to move the pile. Unfortunately many farmers experienced prices below, and in some cases far below, the cost of production, which led to weakened financial positions.
  • Regulation – The Environmental Protection Agency (EPA) finally announced final biofuel volumes for 2014-2016. These numbers were positive for biodiesel and solidified the EPA’s position on the corn-ethanol blend wall. In North Dakota, the EPA’s August announcement of the Clean Power Plan that requires a reduction in carbon emissions was earth-shaking. North Dakota’s mandated reduction is a whopping 42 percent in carbon dioxide emissions due to its use of lignite coal as a feedstock.

In summary, 2015 was a good year for U.S. consumers and the economy, but bad news for oil, coal and the American farmer. In a future column, I’ll give my outlook for 2016.


NDSU Agriculture Communication – Dec. 22, 2015

Source:David Ripplinger, (701) 231-5265, david.ripplinger@ndsu.edu
Editor:Kelli Armbruster, (701) 231-6136, kelli.armbruster@ndsu.edu
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