Iowa has 42 ethanol refineries with 4.6 billion gallons of annual production capacity. In 2021, Iowa ethanol production hit an all-time high of 4.4 billion gallons up from an estimated 3.7 billion gallons of production in 2020. There are plants in all portions of the state with the largest concentration in the northwest quadrant
Iowa produces nearly 30 percent of all U.S. ethanol. About 127.5 million gallons of ethanol are blended with gasoline fuels in Iowa. The rest of Iowa’s ethanol is shipped out of state for blending in gasoline supplies from Washington state to New York as well as into Canada and Mexico.
The bulk of Iowa’s ethanol is shipped by rail. The Surface Transportation Board provides sample waybill data on rail shipments that occur between origin and destination pairings. The waybill data is aggregated at two levels. One is at the Business Economic Area (BEA) code level. In 2020, there were 185 BEA areas and an “unknown” category. The second level of aggregation is by Freight Rate Territories. There are 5 freight rate territories in the U.S. as well as an “unknown” category that includes Canada and Mexico.
The BEA areas are constructed around metropolitan business trade areas and often cross state lines. An example is the Chicago area BEA district number 64 extends from Kenosha, WI to Gary, IN but primarily includes Chicago and the suburbs around Chicago. In this analysis, these BEA areas have been “assigned” to a state for aggregation purposes and BEA district 64 is assigned to Illinois.
In Figure 1, the major destinations for Iowa-produced ethanol are estimated using the 2020 BEA data for shipments by rail, the EIA estimates of ethanol use in Iowa gasolines, a total production number of 3.7 billion gallons of ethanol in Iowa in 2020 and the assumption that any ethanol not shipped by rail or used in Iowa was shipped by truck from Iowa.
In 2020, the rail waybill data indicates that 1.922 billion gallons of ethanol produced in Iowa was shipped by rail to Illinois, primarily to Chicago and surrounding area. Ethanol was shipped from 5 different BEA areas in Iowa as well as from “unspecified” BEA areas in the rail freight rate area that includes Iowa into Illinois. Texas is the second largest destination for Iowa ethanol receiving 499 million gallons of Iowa ethanol in 2020. Ethanol was shipped from plants in 4 BEA districts in Iowa as well as from “unspecified” BEA origins within the freight rail territory that covers Iowa. An estimated 339 million gallons of ethanol was trucked out of Iowa, most likely to surrounding states. California received 200 million gallons of Iowa ethanol and Georgia received 198 million gallons. Iowa used 127 million gallons of ethanol in-state and New York received 115 million gallons. Other destinations for Iowa ethanol include Missouri (70 million gallons), Arizona (56 million gallons), Nevada (40 million gallons), Ontario (38 million gallons) and Utah (25 million gallons). Ten other states, Mexico, and “unspecified” BEAs received ethanol from Iowa ranging from 358 thousand gallons in Colorado to 16 million gallons in Louisiana.
David Miller is the Chief Consulting Economist with Decision Innovation Solutions (DIS). DIS is an Iowa-based economic research firm which provides regular farm economic research and analysis to Iowa Farm Bureau members and staff.