Ethanol Irony—Higher Gas Prices

Ronald Bailey | June 22, 2006

Ethanol prices are soaring, doubling from $2.54 three months ago to as much as $5.75 now, according to USA Today. The result is that the 10% of ethanol in reformulated gasoline could add about 30 cents a gallon to the cost of gas, says Tom Kloza, who is an analyst for the Oil Price Information Service.

USA Today goes on to report the thoughts of an insightful gas station owner:

At an Exxon station in Columbia, S.C., owner Mike McMenamin says he has to charge $2.76 a gallon for E85, compared with $2.69 for regular. He says he's sometimes lucky to break even on E85 purchases.

"You can't expect the American consumer to buy ethanol if it's less miles per gallon and costs more. Even if you're the ultimate tree hugger, you won't do that," McMenamin says.