Ethanol Irony—Higher Gas Prices

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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.

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  1. Where is this mythical station charging $2.69/gallon?

  2. “Where is this mythical station charging $2.69/gallon?”

    Columbia, South Carolina, according to the article.

  3. I should really learn to RTFA.

  4. You don’t have to RTFA, it’s in the post.

  5. Ethanol is the new Jolt Cola: twice the price, and double the pollution.

  6. Ethanol costs more than gasoline. That’s why it kicks in when gas prices are high.

    In short, cause and effect are reversed. High prices cause ethanol.

  7. Ethanol or Bust!

    Stop touching my wood!

  8. I should really learn to RTFP.

  9. As indicated in the USA Today story, this ethanol price spike will be over soon, as refiners like Marathon respond to conditions. Commodities markets speculators share the perception that ethanol will cool down in the next 10 months. Prices dip from about $5.00 gal currently to less than $2.50 gal in early 2007.

    Foreign ethanol is subject to a 54-cents-per-gallon tariff and a 2.5 percent duty. I wonder what effect that is having on the price of ethanol-blended gasoline?

  10. I wonder what effect that is having on the price of ethanol-blended gasoline?

    None. Now pardon me while I get back to counting my shares of ADM.

  11. I watched “Meet The Press” this weekend featuring a panel of Oil Company Execs.

    One of ’em – refering to Ethanol and E85 – pointed out that right now most of it came from first generation sources like corn & sugar.

    His point? There’s only so much corn & sugar…and it’s already in almost everything at the grocery store.

    So if you hit corn and sugar supplies for fuel, prices go up for beef, soda and any other product that contains corn or sugar or uses them in its production.

  12. The valero down the street from my house is $2.67

  13. Corn and sugar? I knew there was something insidious here…this is clearly the work of Big HFCS (I mean, it says corn in the name!)

  14. I eagerly await cellulosic ethanol, which will basically be a way of using much more of the plant, not just the sugary parts.

  15. took me a second to figure out how corn is used in making beef

  16. kwais…you admitted that, why?

  17. The spot price might be $5+ per gallon, but most ethanol is produced under long term contract at around $1.40 per gallon. Ethanol is now be used as an oxygenating agent in place of MBTE. That is what has lead to the increase in the spot price. But since ethanol is produced under long term contract, the spot price has little effect on the retail price of gasoline. The pump price of gasoline reflects what the market (consumers) are willing to pay.

  18. You never heard of corned beef?

  19. You never heard of corned beef?

    Like, duh!!!

  20. Start burning billions of gallons of ethanol and the price goes through the roof. Gee, no one could have predicted that. Even if we genetically engineer some microbes to turn cellulose into starch, there still isn’t enough dry land to grow enough trees to meet our needs.

    Even at $200 a barrel, oil will still be cheap. People just don’t understand what a goddamned fricking miracle it is to power civilization on this naturally occurring toxic waste.

  21. thoreau needs to be doing studies on how much weight cars lose by failing to burn corn-based fuel.

  22. Instead of wasting money on subsidies for ethanol, let’s just invade and occupy the middle east; we can pay for it with the oil revenues!

  23. So you can still buy gas somewhere that doesn’t have 10% Ethanol?

  24. Echoing JC’s last post: What is the difference between E85 and gasoline w/ Ethanol as an MTBE replacement? I’ve assumed that E85 meant 85% Gas / 15% Ethanol, am I wrong? Anyone?

  25. E85 is 85% ethanol and 15% gasoline. DO NOT USE THIS UNLESS YOUR CAR IS DESIGNED FOR E85, OTHERWISE YOU WILL CAUSE DAMAGE TO YOUR FUEL SYSTEM. When you run E85, you get approx. 60% lower miles per gallon. In other words, if you are not paying 60% less per gallon, you are spending more.

    “Gasohol” is 10% ethanol, 90% gasoline. In Massachusetts, most pumps say “may contain up to 10% ethanol”. Something 6-8% ethanol is sufficient as an MTBE replacement, so I believe that is why they say “may contain up to”. Note 10% ethanol gets 5% lower miles per gallon, so if you are not paying 5% less than pure gasoline (assuming you can buy this anywhere), then you are spending more.

    Some service stations in Massachusetts do not have ethanol stickers on the pumps. I have no idea what they are using as an oxygenate.

  26. Corned beef is prepared with salt, not corn. The animal it comes from can be corn-fed, or not.

    See definition of “to corn.” @

    http://www.bartleby.com/61/51/C0645100.html

    Irish-Americans eat corned beef on St. Patty’s day as a substitute for hard to find Irish style bacon, which we would probably call “ham.”

    All of the above is, of course, a meditation meant to calm me down, as thinking about the right idjits in our state legislature who tried to mandate ethanol use even where the Feds don’t will pin my blood pressure.

    Kevin

  27. I live in corn-rich North Dakota, where ethanol is generally touted as the Great Savior Of Western Civilization.

    It’s refreshing to get a more realistic assessment of the subject.

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