Fuel Prices Climb as Subsidies Die

Ethanol 2
According to our sister website, KickingTires.com, Congress' decision to end its 30-year-old ethanol subsidy could boost gas prices as early as next week. That's because virtually all retail gasoline sold in the U.S. contains at least 10% corn ethanol.  Ethanol blenders get a 45-cents-a-gallon tax credit, according to USA Today, so the end of the subsidy means an increase in manufacturing costs. 

When the credit ends Sunday, those costs will most likely be passed right along to the consumer at about 4.5 cents per gallon for regular unleaded gasoline, which typically contains a 10% ethanol blend called E10.

The tax credit is said to cost the federal government $6 billion a year and has been a key point in political rhetoric lately. Congress decided to end the credit over the summer in light of new pressures to reduce the federal deficit. Other factors, such as the increasing independence of the ethanol industry and a steady increase in corn prices (from which most U.S. ethanol is derived), helped persuade politicians to kill the subsidy. Nearly 40% of the United States' corn crop currently goes to ethanol and byproducts, according to the New York Times.

While higher ethanol prices are certain to increase the cost of gasoline production next week, other factors — most importantly, the volatile oil market — could affect the price of gasoline more quickly.

Gas prices averaged $3.28 a gallon on Monday, according to AAA, up from $3.07 a year ago. E85 ethanol averaged $2.95. Since ethanol is less energy-dense than gasoline, however, the price when adjusted to equate to a regular gallon was $3.88 per gallon, according to USA Today.

Ethanol

Comments

It is now January 17th, or more than two weeks since the expiration of the ethanol subisidy, and ethanol prices have gone down. In fact, ethanol is $.60/gallon less than gasoline. On the flip side, gasoline is going up, just as is oil. Mostly blamed on ecomonies improving (which seems off with the news) and the actions of Iran. So, today, if you could use more ethanol, you would be saving money at the pump.

Now get rid of the Ethanol mandate and put this nightmare to bed for good.
Ethanol in this country is a sham.
I am ok with paying more at the pump to be done with Ethanol and all the bad that comes with it.

Gomjabber, everything you said +1.

Yeah, ethanol vehicles get even worse gas mileage than their conventional gas vehicles of the same build. I should have known there was something "CORNY" about ethanol gas...SMH

I F'ing hate ethanol in my gasoline. Not only worse mileage in the car.. but now that we use so much of it for fuel prices for food have gone up across the board.

Ban it from gasoline and watch not only fuel prices go down but food prices as well.

for once Idaho is actually cheaper than the national average. Virtually every station here in Boise is less than $3 a gallon alothugh we get crappy 85-87 octane stuff on that low end. (you can still buy 83 octane in small towns, seriously)

We have one station near me that advertises the fact that their fuel has zero ethanol and they tend to be about $.20 per gallon higher. I am not sure if the increased MPG's would overcome that cost or not but no ethanol fuel is still available.

Hopefully corn prices come down a bit as more goes into food production rather than fuel so the rest of the food chain will stabilize.

well thats good kinda not but not like im gona really benifit from it let me know when the price of diesel drops

Good. No more subsidies, and less traffic! sounds like a win-win to me!

So on the one hand congress is saying to mandate all new vehicles to run on ethanol blends and on the other they end the subsidies. Good thinking.

Electric just keeps looking better and better by the day.
I'm sure congress will find a way to eff that up next to keep the oil companies happy.

Ethanol is a complete joke!

There are way too many trolls! They need to go away!

Regardless of whether there is ethanol or not it is almost a guarantee that fuel prices will be higher. Some experts are predicting $5 a gallon gas by Spring. Hope they are wrong, but afraid they are right.

High fuel prices are coming to a gas station near you. Hey, many of you cried "no food for fuel"!, well you got your wish. Enjoy higher prices. guess practical vehicles will be the new "fashion' statement here shortly....

This outcry over 10% Ethanol gas makes me laugh. I can remember in the 70's there was a big fuss over switching from tetraethyl lead to MTBE. Now everyone wants MTBE, and nobody wants ethanol. Same situation, different generation.

Ethanol is less of a pollutant than MTBE, which was less of a pollutant than lead. I'm sure, eventually, some other method of increasing octane will come along that supersedes ethanol. Then everyone will be crying for their ethanol gas.

Along the same lines, I can't wait until they announce that they're going to drop the sulfur content in gasoline. Right now U.S. produced gasoline is at ~30ppm. That's more than the U.S. ULSD and the majority of European diesel (~10ppm), or gasoline in many European countries (~10ppm). It's only a matter of time before U.S. gasoline gets further reduced, with a matching increased cost. I'm sure we'll hear plenty of outcry over that one too, but at the end of the day, it's still going to happen.

Turning corn into ethanol isn't very efficient. IIRC there is more energy consumed in the process than what you get out of it.

If the govt was really serious about a 56mpg cafe average, it would BAN Ethanol! It's a JOKE AND a WASTE

historyrepeats: let it happen! People driving fancy trucks and huge SUV's can afford it anyway, no matter the price. Cannot put a price on safety, remember?

I am sure I will get flamed for this but: E85 is a better fuel for racing then some race gas. Costs a heck of alot less then race gas. Less dependant on oil. I know it's not a great fuel for on the road due to decreased mileage. The 10% Ethanol probly reduces mileage realistly about 2-3%. But now when the price of the 10% E goes back up, oil companies will find a way to increase the non 10% gas as well. But hey, full size trucks are the best sellers and people will keep buying and driving em when not needed.

Last I looked, there was still no ethanol in diesel fuel. Sure, some states have bio diesel mandates, which aren't any smarter, but at least the stuff works.

corn belongs in food, not in a gastank.
people should not be starving because world food prices climbed, just so the government can pay to process corn into a less efficient, less powerful fuel.

@historyrepeats That will definitely drive up the price of fuel. On Ethanol we had an Australian State ban its use and now E10 does not exist anywhere.

Maybe not corn but Brazil makes ethanol from sugar stalks. What about switch grass or the waste of agricultural products? This would not necessarily replace oil but it would lower our dependency and make us a little more self-sufficient. I agree just growing corn for ethanol is wasteful but what about taking agricultural waste products to make ethanol and add it to gas. We have so much waste in this country that if we processed it and used most of it we would start to make a difference. Think of all the methane gas that could be used from all the landfills and sewer plants that could be put back into our power grid along with nuclear, coal, solar, wind, and etc. All these sources along with greater fuel and energy efficiency used with increased domestic oil and gas drilling over a period of time could lessen or eliminate our importing of oil. Think synergistically not just one source. The sum of all the parts is greater than all the individual parts separated. Lets get off this negativity and demand that we have a comprehensive energy plan.

Algae based bio-diesel is probably still another 5-8 years away from the efficiencies that are needed and probably another 5-8 years on top of that for major infrastructure investments but it is probably the most viable idea currently out there to replace existing fuels with something that is at least carbon neutral or very close to it that doesn't need a major infrastructure change for the delivery system.

I hope that this is the way of our future because it will likely be one of the most beneficial from an environmental perspective and least costly economic changes. It isn't perfect but is a great bridge until better tech can be developed and implemented.

Awesome... and even better... they STILL talk about boosting to 20% ethanol in our fuel. Great! - end sarcasm.

And diesel still keeps climbing without any of this ethanol crap...WTF!!!

@mhowarth--That could be a very viable option. Exxon-Mobile has been working on algae based fuel. Algae based fuel could use the infrastructure we already have for delivery of gasoline and diesel.

Another option is if the battery technology gets better nuclear energy could provide us more energy. We are the Middle East of uranium (we export more than we use). There is no one solution but there are some new sources that could provide the bulk of our fuel. These alternatives will take awhile but time is a wasting, lets get started.

Far better for ethanol to have to stand on its own 2 feet and for the consumers of it to pay directly, than for taxes to be taken out of my pocket to pay for subsidies!

nuclear energy haha yeah look at japan, just what we need idiots. so when it fails it kills us all. i rather just burn crude screw the other junk.

Only an incredibly small portion of the earth is viable to grow crops.

You drill holes in the ground to get oil.

When the day comes that we can drill holes and grow crops underground that feed the planet, maybe I'll be a fan of ethanol... .

Rising gas prices... *hrp* Oh sorry, they very thought of gas going up makes me dry heave.

Fuel prices are going to rise, with or without subsidies. Demand for fuel may be down in the US but it is UP everywhere else on the globe. We are now EXPORTING gasoline!

But no matter what fuel is going to cost in the future, people will continue to buy it. It beats walking. During the past gas-price spikes people bought gas no matter what it cost at the pump.

There was no reduction in traffic and there was no reduction in the availability of fuel. This is not 1973 when there was an actual shortage of fuel.

There's plenty of oil and there is plenty of fuel. And there is even more oil available to us if we choose to drill or frack for it in America. And when the time comes, that is exactly what we will do in America, develop our own oil and natgas resources.

Most people don't care what fuel costs. They'll continue to buy it if they want to drive. It's a bargain at any price.

Large swaths of groundwater have been permanently polluted by MTBE. E10 is a much better solution for oxygenation/octane boosting gasoline. I'm not saying subsidies are a good idea, but completely ceasing ethanol production creates other problems. Too bad we can't grow a lot of sugarcane like Brazil and have cheap/plentiful ethanol.

im all for backup camera's, front camera, side cameras n all that good stuff. but i still stay id u need the car to park n back up ur trailer for u, u shouldnt be driving. part of getting a license to drive was being able to do these urself.

can we safely say, lexus ls owners, ford focus n escape owners should be allowed to drive if they need their vehicles to park for them. i think so.

@ Highdesertcat

A bargain at any price?!?

Try telling that to someone who makes minimum wage and commuting to the other side of the city and back each day costs them half of their weekly pay.

America is not designed for European gas prices. We don't have the right kind of development for our cities and we don't have effective and affordable mass transit. And most importantly, we don't have fuel efficient cars.

@Max: How good a mileage do you want them to get? I mean, yes they should continue trying to improve mileage, but 29 city 39 highway isn't good enough for you? People don't have to buy gas guzzlers. i have a friend that just got a 600$ station wagon, if she was willing to drive a manual trans car she woulda got better mileage, and alot more vehicles to pick from. And for $600 what do you expect? For 1500? But no. Good gas mileage cars are out there. And you don't have to be rich to afford it. Some people are too proud to drive a mileage getting car. as for myself I have a Hemi Ram 1500, but I drive a 96 Camry Coupe 5 speed 4 cylinder good for no worse then 20 MPG in city and 29 highway, but I have seen 33 plus highway in the summer. Thats what I drive when I don't need a truck, most the time. And it doesn't cost an arm and a leg either.

@desertcat- So since gas prices go up but driven miles doesnt go down, that must mean high gas prices dont bother us? What?! We still have jobs to go to, no matter what. I drive about 360 miles a week with 95% of that being just to work and back. How would I go about cutting miles out of that? I cant. High gas prices DO bother me but driving less would mean not going to work. Moving closer to work is not an option and I shouldnt have to trade in my truck that is paid off and runs fine for another vehicle.

I wish ethanol had delivered as promised...but it did not.

Gummed up fuel injectors? Lower MPG? Corn made with pesticides and herbicides that leach into streams.

What a great idea that was. I've switched to no-ethanol fuel in my small engines and my performance car. But ol' truck soldiers on with E10.

And lads, whatever the "drill here, drill now, pay less" crowd says, the science behind matters shows we do need alternative fuels. The light sweet crude has been discovered. We're extracting expensive and dirty oil from...tar. From the heavy oils full of sulfur and deep under the ocean.

High gas prices? Look no further than how much we spend to get the gasoline we use nowadays.

And that won't change. We do need to re-engineer our American cities and suburbs. But we won't and the result will be an oil crisis like nothing we ever saw before. I hope we'll still be able to drive our trucks.



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