Fuel ethanol prices track rising US gasoline

11 April 2006 23:50  [Source: ICIS news]

HOUSTON (ICIS news)--Fuel ethanol prices have reacted to rising US gasoline prices, driven by crude oil approaching the $70 (Euro58)/bbl mark, the Renewable Fuel Association (RFA) said on Tuesday.

Spot ethanol prices in the New York Harbor sold for May at $2.78/gallon in Tuesday business, traders said. New York Harbor and Southern California spot ethanol top prices ranged between $2.60-2.75/gallon - about 10 cents/gallon more than prices during the previous week, according to global chemical market intelligence service ICIS pricing. These levels represent about 10 cents/gallon increases over the previous week’s prices.

RFA representatives and the Energy Information Administration (EIA) said crude oil was the main driver for rising gasoline prices. “With oil prices near $70/bbl and refining capacity still struggling to come back online, it’s clear that those factors have far more to do with consumers paying more at the pump than the increased use of ethanol,” said RFA president Bob Dineen.

EIA administrator Guy Caruso said gasoline prices were likely to rise by 25 cents/gallon this summer (Northern Hemisphere), with 19 cents (76%) of that increase due to high world crude oil prices. According to sources, the EIA projected an average US gasoline price of $2.62 for this summer’s driving season.

RFA spokesman Matt Hartwig said more than 85% of ethanol sold in the US is done on 6-12 month contracts. Fuel ethanol supply is tight in the US because demand has surged in the transition from methyl-tertiary butyl ether (MTBE), the RFA said.

By: Judith Taylor
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