Ethanol Mandate to Raise Gasoline Price

[G8trGr8t]

The stupid decisions jsut keep coming from this administration. Remember this next time you want to complaina bout the cost of gasoline. The EPA is becoming the biggest cost outside of the oil itself.

The cost of complying with a federal mandate to use corn ethanol in fuel has risen sharply in the past few months, putting a squeeze on oil refiners.

The price of each credit that refiners need under the law topped $1.00 Friday, up from just a few cents last year.

"Eventually that cost is going to get passed along," said Bill Day, a spokesman for Valero Energy Corp., VLO -3.41%which sells gasoline to about 5,000 filling stations in the U.S.

Valero and other big refiners, such as Marathon Petroleum Corp. MPC -1.63%and Tesoro Corp., TSO -2.05%haven't publicly estimated how the compliance costs would affect earnings. The industry has been reporting steady profits recently.

The new expenses "will have an impact on refinery margins," said Tom Kloza, chief oil analyst with the Oil Price Information Service. Refiners could attempt to pass the higher costs on to consumers but so far, that hasn't happened, he said.

The sharp rise in ethanol-credit prices reflects broader problems with the 2007 law, which sought to drive increased use of renewable fuels. Another piece of the mandate, requiring industry to buy fuels made from nonedible plants, has run into trouble because there isn't enough supply to meet federal requirements.

Until now, refiners have been able to hit their quotas because about 10% of U.S. gasoline is ethanol. The U.S. consumed about 133 billion gallons of gasoline last year, according to the Energy Information Administration. That meant that about 13.3 billion gallons of ethanol was blended into gasoline, just above the requirement of roughly 13.2 billion gallons.

The Environmental Protection Agency's proposal for this year, which could be made final as soon as next month, could force refiners and fuel importers to use more than 14 billion gallons of ethanol.

But refiners are reluctant to blend gasoline with more than 10% ethanol largely because auto makers say most vehicles can't handle a higher rate. That 10% figure is known as a "blend wall," keeping more ethanol from entering the market.

If Americans don't buy more gasoline this year than last, the blend wall creates a conflict with the government's ethanol requirement. The oil industry is pushing the EPA to lower the 2013 ethanol requirement.

Fears that they will hit the blend wall appear to have made refiners and fuel importers eager to buy credits on the open market, pushing credit prices higher. On Jan. 14, the price of a credit rose above nine cents for the first time in more than two years, according to the Oil Price Information Service. The price has jumped more than tenfold since.

Stephen Brown, Tesoro's vice president for federal-government affairs, said the situation could give U.S. refiners an incentive to export gasoline because exports aren't subject to the same ethanol requirements.

http://online.wsj.com/article/SB1000...846017206.html

google

U.S. Ethanol Mandate Puts Squeeze on Oil Refiners

for the full article if link doesn't work

This administration wants nothing more than higher and higher gasoline costs to make the alternatives more cost effective and they continue to prove that with their actions. Ethanol is without a doubt one of the stupidest things to ever hit the energy market and is terrible for 2 cycle motors and boats with fiberglass fuel tanks.

[brainstorm]

We can read the article and see the problem (and resolution) immediately. Why can't the EPA?

[LittleBlueLW]

Burning our food is such a great idea.

Not to mention the damage this crap does to engines, fuel tanks and fuel lines.

[brainstorm]

And it gives less energy per gallon of fuel.

[tegator80]

Originally Posted by LittleBlueLW

Burning our food is such a great idea.

Not to mention the damage this crap does to engines, fuel tanks and fuel lines.

Just remember that this was a "brilliant" idea from W.
.
.
.
and ADM who helps fund many campaigns on both sides of the aisle.

[G8trGr8t]

yes, stupidity seems to be bipartisan. and once one idiot starts something, each idiot after him seems to perpetuate and grow it regardless of it's merits.

[brainstorm]

R or D - just a bad idea that needs to go away.

[oaklandroadie]

The Economist just had a great article on this two weeks ago. Surprising to me though was their contention that American fuel is priced too low. Made points that it skews the free and open market by favoring certain industries an corporations.

[baygator1]

Originally Posted by brainstorm

R or D - just a bad idea that needs to go away.

This.

[LittleBlueLW]

Originally Posted by tegator80

Just remember that this was a "brilliant" idea from W.
.
.
.
and ADM who helps fund many campaigns on both sides of the aisle.

One of the many dumb things he did. And the current guy, well he aint no different.

[Gatorrick22]

Pub or Dem, it doesn't matter... it's still a bad idea. Look for food prices to skyrocket because of this.

.....more reason for BO to give even more in food-stamps.

[G8trGr8t]

Originally Posted by oaklandroadie

The Economist just had a great article on this two weeks ago. Surprising to me though was their contention that American fuel is priced too low. Made points that it skews the free and open market by favoring certain industries an corporations.

Cheaper fuel favors every industry and the whole economy in general. Everything you eat, wear, or touch has used energy to produce it and transport it. Higher energy costs are a direct headwind to GDP and ability to be competetive in a global economy.

[Gatorrick22]

Originally Posted by G8trGr8t

Cheaper fuel favors every industry and the whole economy in general. Everything you eat, wear, or touch has used energy to produce it and transport it. Higher energy costs are a direct headwind to GDP and ability to be competetive in a global economy.

Some people, not including roadie, are totally blind the see the facts about how gas prices affect everything we make and is purchased on Earth.

The only ones that gain with higher gas prices is our government and foreign governments like China, Russia, India and all of Europe's.

[Gatorrick22]

Originally Posted by G8trGr8t

The stupid decisions jsut keep coming from this administration. Remember this next time you want to complaina bout the cost of gasoline. The EPA is becoming the biggest cost outside of the oil itself.
http://online.wsj.com/article/SB1000...846017206.html

google

U.S. Ethanol Mandate Puts Squeeze on Oil Refiners

for the full article if link doesn't work

This administration wants nothing more than higher and higher gasoline costs to make the alternatives more cost effective and they continue to prove that with their actions. Ethanol is without a doubt one of the stupidest things to ever hit the energy market and is terrible for 2 cycle motors and boats with fiberglass fuel tanks.

Is the EPA illegally mandating/dictating laws again?

[g8orbill]

Originally Posted by brainstorm

And it gives less energy per gallon of fuel.

I drive out of the way to fill up with gas containing no ethanol

[geauxgator1]

Additionally corn prices should be going through the roof, also. I understand some of the third world countries that rely on corn heavily are really screwed.

[G8trGr8t]

Originally Posted by g8orbill

I drive out of the way to fill up with gas containing no ethanol

I do for my boat and other 2 cycle stuff (chanisaw/weedeater) but down here it is $1 more per gallon

[rajinGator]

Originally Posted by geauxgator1

Additionally corn prices should be going through the roof, also. I understand some of the third world countries that rely on corn heavily are really screwed.

Also fertilizer and pesticide prices go up, adding to the cost of food and other products and services.

[G8trGr8t]

no studies or links but I really believe that without cheap natural gas providing cheap electricity and cheap oil sourced from N. America this country would still be in a recession. Imagine electricity 15 - 20% higher and gasoline based on $120 oil instead of $95 oil. Toss in the extra billions that would have been exported buying oil from outside N America and all the jobs that the E & P business has created and I have no doubt that we would still be in recession despite the monstere stimulus and fed printing. Amazing that 0 continues to paint the energy E & P companies as evil when they are what have been saving this economy.

[oaklandroadie]

The Economist also hammered the OA for not speeding up the process to authorize the exportation of natural gas.

This country's energy policy seriously sucks. And I just learned that from like 6 paragraphs.