Now uncertainty over ethanol is keeping US gas prices up

Now uncertainty over ethanol is keeping US gas prices up according to the NW Republican blog quoting a report by Jad Mouawad in the New York Times.

Gas prices are spiking again — to an average of $3.22 a gallon, and close to $4 a gallon in many areas. And some oil executives are now warning that the current shortages of fuel could become a long-term problem, leading to stubbornly higher prices at the pump. They point to a surprising culprit: uncertainty created by the government’s push to increase the supply of biofuels like ethanol in coming years…

What is surprising about that is that the person who said it originally did so with a straight face. I doubt that Borat would fall for that line. Am I right or am I overreacting. Let me know

, , , , , , , , , ,

2 Responses to Now uncertainty over ethanol is keeping US gas prices up

  1. Mark C R UK 24 May, 2007 at 10:44 am #

    Sounds like a deflection to me…

    I’m interested as to what impact that may have on the US car market – going on the previous post….. Simon and the blog mentioned therein.

  2. Andy Harbourne 24 May, 2007 at 11:01 am #

    (Disclosure: Formerly COP refining engineer and now a consultant on nitrogen chem & ferts)

    You are over-reacting, I’d say, the oil-boilers have a legitimate point.

    1st Gen biofuels are higher cost that oil refining but are being given a leg up by subsidies. No-one really has a clue how much uptake there will be in the long term, at what eventual level of blending, and therefore how much HC refining capacity will be pushed out and where. 2nd gen could be much worse for refiners, as it could be lower cost and maybe still subsidised. Patchwork fuel standards penalise refiners but etOH as a locally-blendable additive is a fungible commodity.

    Think through the consequences of “breaking the addiction to ME oil”. It means less refining of ME oil on US soil, so you’d be a fool to invest in capacity…this will crunch the market in the short term or if etOH capacity doesn’t pull through as expected. As with any piece of legislation, the law of unintended consequence applies. No point blaming those you’ve forced into a corner.

    I’ve heard Hofmeister speak on gasification as a source of energy diversity, I didn’t get the impression he’s the business-as-usual type I suspect you’re trying to portray.

Leave a Reply