"There's been unconscionable behavior all right, most of it on Capitol Hill. A decent portion of the latest run-up in gas prices--and the entire cause of recent spot shortages--is the direct result of the energy bill Congress passed last summer. That self-serving legislation handed Congress's friends in the ethanol lobby a mandate that forces drivers to use 7.5 billion gallons annually of that oxygenate by 2012.Let's see, I think this means the price of ethanol has almost doubled since "as recently as last year." Perhaps all the yelling in Washington is really nothing more than politicians doing what they usually do when they screw up, i.e., start blaming any body but themselves.
At the same time, Congress refused to provide liability protection to the makers of MTBE, a rival oxygenate getting hit with lawsuits. So MTBE makers are leaving the market in a rush, while overstretched ethanol producers (despite their promises) are in no way equipped to compensate for the loss of MTBE in the fuel supply. Ethanol is also difficult to ship and store outside of the Midwest, which is causing supply headaches and spot gas shortages along the East Coast and Texas.
These columns warned Republicans this would happen. As recently as last year, ethanol was selling for $1.45 a gallon. By December it had reached $2 and is now going for $2.77. So refiners are now having to buy both oil and ethanol at sky-high prices. In short, the only market manipulation has been by politicians."
Tuesday, April 25, 2006