Ethanol not to blame for gasoline prices
Wednesday, April 12, 2006, 12:05 PM
by Bob Meyer
Audio related to this story
(AUDIO: Bob Dinneen talks about the current ethanol situation 5:33 MP3)
The President and CEO of the Renewable Fuels Association (RFA) says there is plenty of ethanol to meet demand, there is no problem delivering ethanol and it is not the reason gasoline prices are going higher. Bob Dinneen says, “The main reason for higher gasoline prices is $70 crude oil, significantly higher than where it was a year ago.” He says there are several factors contributing to that price increase, volatility in oil-producing countries, refining capacity, increasing demand in China and India and speculators bidding the price up. “Eighty percent of the price of gasoline is directly attributable to the price of crude oil and taxes,” says Dinneen.
Even though they are not yet required to do so, most gasoline refiners are taking MTBE out of their summer formulas and replacing it with ethanol. That has prompted rumors that there is not enough ethanol to meet demand; Dinneen says that is just not true. “The rate of growth in the ethanol industry is astounding and is one of the reasons why refiners, as they remove MTBE, are able to do so in a way that will not impact consumer gasoline prices.” In fact, Dinneen charges “Were it not for ethanol, gasoline prices would be going through the roof!” He adds 10% ethanol is now being blended in about 30% of the gasoline in the country that converts to roughly 3% of the total gasoline supply, not enough to have any influence on price.
One other myth that Dinneen says, “Gets my Irish up,” is claims that ethanol cannot be delivered via pipeline. He cites the fact that ethanol is piped all over the country in Brazil, “Because Brazil built their pipeline to accommodate ethanol, we built our pipeline to accommodate oil.” Specifically, he says our system was designed so oil from the Gulf Coast can flow to the East, the Midwest and the West, “It is not set up for a fuel that is produced in the Midwest and has to go the East and the West and the South.” He says it is cheaper and faster to move it by barge and rail and truck than to float it down to the Gulf and then load it into the pipeline, “And watch it get shipped at three miles per hour up to Boston or New York or Washington or wherever it needs to be. We can get directly to those markets with rail and do it faster.”
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