Petroleum Group Discounts Ethanol’s Role in Gas Prices
by Kris Bevill (Ethanol Producer Magazine) In a Feb. 22 press call to discuss rising gas prices, the American Petroleum Institute’s chief economist, John Felmy, blamed crude oil prices for high prices at the pump, and said refinery closures and increasing exports of U.S. gas and diesel are not major factors in the spike in prices.
…Felmy declined to acknowledge ethanol’s role in staving off even higher gas prices, however, despite consistent claims from the ethanol industry that the price of gas would be up to 10 cents higher per gallon if ethanol were not being blended. Instead, he indicated that API believes ethanol is an added expense for refiners. “Right now, the cost of ethanol on an equivalent Btu basis is above the cost of Refiners Blendstock for Oxygenated Blending,” he said. On Feb. 21, for example, he said ethanol’s price on a Btu basis was $3.34 per gallon whereas RBOB on a Btu basis was $3.07.
Ron Lamberty, senior vice president of American Coalition for Ethanol, countered that comparing ethanol and RBOB prices on a Btu basis is not a valid argument because fuel is sold based on octane, not Btu content. “Premium gasoline has the same Btu content as unleaded – but it costs a lot more because it’s higher octane,” he said. “If three or four octane points is worth 18-20 cents in premium gasoline, ethanol should be selling for about four and half bucks. The biggest concern refiners actually have about ethanol is that they don’t make it, and they’re going to say whatever they have to say and do whatever they have to do to hold on to their 90 percent gasoline mandate.” On Feb. 23, ACE noted that ethanol wholesale prices in the Gulf Coast were about 75 cents less than gasoline and said 10 percent ethanol blends currently save consumers 7 to 10 cents per gallon compared to unleaded gasoline. READ MORE