No Logic in Blaming Ethanol for High Gas Prices
by Bob Dinneen (Renewable Fuels Association/US News and World Report) Ethanol is less expensive than gas, and consumers will benefit more if it’s used.
Logic is nowhere to be seen in petroleum analyst Gregg Laskoski’s call to reduce or revise the renewable fuel standard (“Logic Should Prevail on Ethanol”, April 2, 2014).
Referring to a Reuters article about the “cost” of ethanol credits to certain refiners, Laskoski completely ignores the other side of the ledger, i.e., that other refiners benefited greatly from the trading and sale of those very credits. You see, it’s a credit trading system in which only obligated parties (oil companies) can hold or sell credits. The credit program was created to benefit refiners, to build flexibility into the program, to assure that those refiners unwilling or unable to blend the level of renewable fuels required would still be able to meet their obligation. So, for example, oil companies like Marathon Petroleum Corporation that blend more renewable fuels than is required have stated quite plainly that their shareholders have profited from the program.
A recent analysis by the Center for Agricultural and Rural Development at Iowa State University found that higher Renewable Identification Number prices lead to lower gas prices for consumers by encouraging refiners to put in the infrastructure and allow the sale of higher blends of ethanol. You see, ethanol is less expensive than gasoline, so consumers will benefit if more is used. That’s the whole point of the the renewable fuel standard. READ MORE