08 May 2006 19:10 [Source: ICIS news]
Ethanol prices have risen sharply from $1.92 at the start of the year and spot prices recently were around $2.75/gallon range in the
Meanwhile, the recent surge in ethanol and crude oil prices have contributed to a sharp rise in the retail price of gasoline, which in many areas is above $3/gallon for the first time since Hurricanes Katrina and Rita disrupted refinery output last year.
A milestone for both MTBE and ethanol occurred on 5 May, when the Energy Policy Act of 2005 eliminated the 2% oxygen requirement for gasoline. The law also encouraged a doubling of the
Since the passage of the law, the refining industry has been phasing out the use of MTBE - aggressively converting existing plant production and tankage in refineries, terminals and retail service stations - and now the industry appears to be nearly MTBE free.
Most MTBE production facilities in the
Sources in the MTBE market anticipate future production will be limited to only a small handful of plants and almost all of the product generated will be exported to
The shift to ethanol in the gasoline market has not been without its costs. Compared with MTBE, the use of ethanol reduces the overall gasoline supply since other gasoline components are removed to compensate for the higher vapour pressure and other characteristics of ethanol. Gasoline with ethanol also provides lower octane per gallon than gasoline with MTBE, and thus fewer miles per gallon for vehicles.
Ethanol also presents logistical problems, compared with MTBE. It must be transported and stored separately from other gasolines because they contain a certain amount of water that tends to draw the ethanol out of a gasoline mixture.
Because ethanol typically is added to raw gasoline at the last step of the distribution chain, just prior to shipment to the retail service station, growing ethanol use will increase demand for rail and truck transportation.
These market shifts may result in some temporary gasoline supply shortages during the peak driving season this summer, government officials have said.
On Monday, the Environmental Protection Agency said six states -
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections