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Veteran Advisor

Understanding things like prospects for ethanol demand require that...

Understanding things like prospects for ethanol demand require that we have some insight into how people will respond to this pandemic over time.  Clues to this are beginning to emerge.  A study of smartphone tracing data shows how peoples' behavior is changing over time and give indications as to how much travel and maybe how much gasoline (ethanol) is being used.

  One such study has been published by the Washington Post here: https://www.washingtonpost.com/graphics/2020/national/map-us-still-staying-home-coronavirus/?itid=hp...

It is a really neat graphic that uses smartphone pings to measure how the amount of time people spend at home has changed over the course of the past few weeks.   On March 1, people spent about 65-75% of their time at home. By April 7, the so-called peak of the mitigation measures people were spending 90-95% of their time at home. By  April 30, people were spending 75-85% of their time at home.  As you might expect, people in the hardest- areas are still spending most of their time at home.  Over the course of the next few weeks, we'll be able to compare the % of time at home with increased gasoline consumption.

   I might add, the trends might also explain one very troublesome development.  If you compare the graph of new infections (& deaths) between areas of the country that have been particularly hard hit like New York, Detroit & Louisiana with the rest of the country over time, you see that new infections in the hard-hit areas are systematically declining while new infections in the rest of the country are steadily increasing.  If you compare new infections in the areas where people are staying at home less with those in areas where people are staying at home more you can see immediately why. This trend goes a long way to explaining why the latest estimates of deaths have more than doubled.

  We already know for example that when Georgia opened up last week, out-of-staters flooded in.  You can expect a sharp rise in infections (& eventually deaths) in a few days.

  The question then becomes, will the second wave frighten people enough to voluntarily return to "lockdown" or will they just accept another 100,000 deaths as the price to pay for their "freedom". 

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Veteran Advisor

IF the usa

Learns how to distance,  check worker temps,  check personell antibodies,  etc... There's no reason for anymore deaths. 

Keep in mind how much of Germany has handled corona. 

Just read bout a Black Forest outfit W 6300 employees that has not really missed a production beat... There were 5 or 13 employees that went to home quarantine from the plant. 

 

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Advisor

Exceptional Twitter thread on “IF the USA”

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Senior Contributor

Re: Understanding things like prospects for ethanol demand require that...

I think due to the Covid 19 and the ramifications from it , and how it made us operate here in the short term will have long lasting effects.

Case in point ;  I do not see any reason to have the office staff ever report to work again. They have been working from home this whole time and it works pretty flawlessly. They love it, I would argue that they are actually more productive.

If more companies look at this and stay in that mode , look what it would do to the economy.  Less driving , roads last longer, cars last longer , don't need to buy tires as often , less vehicle maintenance , buying less fuel , no need to build bigger office buildings , less construction , and on and on and on.    

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Veteran Advisor

Re: Understanding things like prospects for ethanol demand require that...

Economists are watching gasoline consumption, going forward. Right now, we are using about 6 million barrels per day. The question is how fast can we get to 9.0 million barrels per day. And, by August, there are some that we reach 10.0 million barrels per day. It's interesting to watch this data analysis. The ethanol industry could really use a rise in gasoline consumption.

Do you think the U.S. will see a snapback in gasoline consumption? Will it be a V-shaped, U-shaped or L-shaped recovery?

What say you?

 

Mike

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Senior Advisor

Re: Understanding things like prospects for ethanol demand require that...

W shaped, with a fairly low bounce in the middle. As to whether All the King's Men can manage that bounce into and through the election remains to be seen.

We went into this following a long recovery and households and corporations held record debt levels (as did farms). Some half of households have been set back, some by a lot. That doesn't heal itself overnight, historic fiscal and monetary stimulus notwithstanding.

On fuel, I'll stick with a recovery to 80% of previous on a seasonally adjusted basis. That is better for ethanol but not good and it doesn't fill the big hole behind.

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Senior Advisor

Re: Understanding things like prospects for ethanol demand require that...

Farms have a pretty plump asset base to carry that debt on.

Corps, not exactly. They still have elevated stock prices but they drained the cash coffers for buybacks and dividends.

Households, not at all except for home equity for some.

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