Rising Gas Prices

Okay, okay, contrary to what I jokingly said to Grrl the other night on the fone, the rise in gas prices is not to pay for that Exxon CEO’s obscene retirement package.

This who’s to blame roundup by Joe Gandelman states several theories, of which one –by Henry Payne of the Detroit News — stood out: Blame the Energy Bill that the Republicans are naming in their own defense:

As opportunistic Democrats pile on, Republicans defensively point to their passage last year of the energy bill as evidence that they are “doing something” — reducing dependence on imported oil and encouraging greater use of ethanol in gasoline.

How ironic. It is precisely the energy bill — along with international events — that is causing the prices to increase.

“Gasoline prices are up 60 cents over last year at this time,” says Dan Gilligan, president of the American Petroleum Marketers Association of America, which represents fuel distributors nationwide. “Forty-five percent of that is higher crude prices, due to reasons we have little control over: political instability in places like Iran and South America, Chinese demand, etc.

“But 15 percent of that increase is due to the effect of last year’s energy bill.”

Congress first mandated the production of 4 billion gallons of ethanol this year (increasing to 7.5 billion in 2012). This arbitrary number is to help wean America from its “oil addiction,” as President Bush puts it. In reality, it is a sop to the powerful farm lobby that makes corn-based ethanol.

Second, the energy bill required that ethanol replace MTBE as an additive in gasoline to meet smog rules in urban areas. Because smog is heaviest in summer, oil companies are refining their “summer blends” now. Already struggling to meet the initial 4 billion gallon mandate, the ethanol industry cannot keep up with the additional demand from the MTBE mandate, resulting in shortages and price spikes.

“We asked for a more orderly, two-year transition from MTBE to ethanol. But we didn’t get it,” Gilligan laments. [Read More]

One response to “Rising Gas Prices”

  1. Bro-ski

    Don’t blame me, I voted for Perot in ’92…