U.S. ethanol production during the fourth quarter of 2022 nearly caught up to pre-COVID levels despite falling energy prices and lower gasoline demand, according to the latest quarterly report released by CoBank’s Knowledge Exchange.

Production was at 15.5 billion gallons on an annualized basis, down slightly from the five-year average. CoBank called the level of production “reasonable” in the context of ending stocks that were approximately 8.5 percent above the five-year average.

Margins for the fourth quarter averaged 27 cents per gallon, up from 25 cents per gallon for the first nine months of last year. Margins were in line with long-run historical averages of 25 cents to 30 cents per gallon, according to CoBank. The report also notes that profitability was well above average in October and November. Higher corn prices and a 12 percent decline in ethanol fuel prices, however, reduced margins in December.

According to CoBank, the ethanol industry is moving into 2023 with some positive tailwinds, including implementation of the Inflation Reduction Act, continued build-out of renewable diesel production capacity, and a continued push for year-round E15 sales in the Midwest.

A full copy of the quarterly report is available on the CoBank website.