Ethanol in US seen to mitigate soaring oil prices

18 October 2007 00:07  [Source: ICIS news]

HOUSTON (ICIS news)--Ethanol in the US provides the solution to rising petroleum prices, the Renewable Fuels Association (RFA) said on Wednesday.

“The wild rise in oil prices at a time when prices should be holding steady underscores the kind of volatility in the marketplace that is only being mitigated today by the use of renewable fuels like ethanol,” said RFA president Bob Dinneen.

The RFA said that US ethanol production, estimated by the group at almost 6.5bn gal this year, will help to meet the growing demand for gasoline.

“By blending ethanol in gasoline today, refiners can save consumers up to 10 cents/gal and help soften the inevitable rise in gas prices thanks to record oil prices,” Dinneen said in a statement. “Unfortunately, not all refiners are capitalising on the economic advantages of ethanol blending.”

The RFA pointed out that oil prices are inflationary on the US economy.

The impact of oil on the price of processing, packaging and transport of products such as cereals, beer and meat has been unfairly blamed on ethanol producers who use corn as feedstock, the RFA said.

“By a factor of two-to-one, oil prices are more responsible for escalating consumer food prices,” Dinneen said.

The US is the world’s number one ethanol producer.

By: John Waggoner
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