The Federal Trade Commission issued its 2025 Report on Ethanol Market Concentration, finding that the ethanol production industry continues to maintain adequate competition levels that prevent anticompetitive practices. The Commission voted 2-0 to approve the report, which concluded that market participants are unlikely to engage in price-setting or other coordinated behaviors that could harm consumers.
The annual review stems from congressional mandates established in the Clean Air Act, as amended by the Energy Policy Act of 2005. This legislation specifically directs the FTC to conduct yearly assessments of market concentration within the ethanol production sector "to determine whether there is sufficient competition among industry participants to avoid price-setting and other anticompetitive behavior."
According to the 2025 report, "the level of concentration and number of market participants in the U.S. ethanol production industry continue to suggest that the exercise of market power to set prices, or coordinate on price or output levels, is unlikely on a nationwide basis." This conclusion mirrors findings from previous years, indicating a consistent competitive landscape in the ethanol sector.
The ethanol industry plays a crucial role in the U.S. energy market, particularly as a renewable fuel additive that helps reduce greenhouse gas emissions and decrease dependence on petroleum imports. Federal renewable fuel standards require gasoline to contain specific percentages of ethanol, making the industry's competitive health essential for maintaining reasonable fuel prices for consumers.
Christopher Grengs, a staff attorney in the FTC's Office of Policy Planning, served as the lead attorney on the matter. The Office of Policy Planning typically handles economic analysis and policy research for the Commission, making it the appropriate division to oversee this type of market concentration study.
The FTC's market concentration analysis likely examined several key factors to reach its conclusions about competitive conditions. These typically include the number of ethanol production facilities, the market share distribution among producers, barriers to entry for new competitors, and the geographic distribution of production capacity across the United States.
The ethanol production industry has evolved significantly since the Energy Policy Act of 2005 established the renewable fuel standard and mandated these annual reviews. The sector has experienced periods of rapid expansion, consolidation, and technological advancement that have shaped its current competitive landscape.
For consumers, the FTC's finding suggests that ethanol prices are likely determined by competitive market forces rather than coordinated behavior among producers. This competitive environment helps ensure that the costs of ethanol-blended gasoline reflect actual production costs and market conditions rather than artificial price inflation.
The unanimous 2-0 Commission vote demonstrates bipartisan agreement on the report's findings. This consensus suggests that the evidence supporting the conclusion about competitive market conditions was clear and convincing to commissioners across party lines.
Market concentration analysis is a standard tool in antitrust enforcement, helping regulators identify potential competitive problems before they harm consumers. The Herfindahl-Hirschman Index (HHI) is commonly used to measure market concentration, though the FTC report did not specify the exact metrics or thresholds applied in this analysis.
The ethanol industry's competitive structure benefits multiple stakeholders. Farmers gain access to markets for corn and other feedstocks used in ethanol production. Consumers benefit from competitive pricing and fuel options that can reduce gasoline costs. Environmental advocates see continued production of renewable fuel alternatives to petroleum.
Looking ahead, the FTC will continue monitoring ethanol market concentration through these annual reviews. Changes in production capacity, mergers and acquisitions among producers, or shifts in federal renewable fuel policies could all impact the competitive landscape in future years.
The Commission's ongoing oversight reflects the importance of maintaining competitive markets in energy sectors that directly affect consumer costs and environmental goals. Regular monitoring helps ensure that the benefits of renewable fuel policies reach consumers through competitive pricing rather than being captured by coordinated producer behavior.
This year's report reinforces that current market structures in ethanol production support competitive outcomes, providing confidence that the industry continues to serve consumers and policy objectives effectively without requiring additional regulatory intervention to address anticompetitive concerns.