Gas Prices Surge Again, Especially for Ethanol Blend
Gasoline prices are up — especially ethanol prices. In Lincoln, the price for regular gas has jumped about 17 cents a gallon in the past month, according to LincolnGasPrices.com. Friday’s average price was $2.45 a gallon, compared with $2.28 a month ago and $2.15 a year ago.
The state price was nearly $2.43 a gallon, compared with $2.33 a month ago and $2.07 a year ago, according to the AAA Fuel Gauge Report. The record high average for regular in Nebraska was $3.20 in September 2005.
Some of the recent increase can be attributed to rising crude oil prices, said Rose White, public affairs director of AAA Nebraska.
Crude oil prices hit $63 a barrel last week, then declined to close Friday at $60.53 a barrel.
A recent OPEC decision to maintain production levels won’t bring motorists any relief, said Jason Schenker, an economist with Wachovia Corp. He predicts retail gas prices could rise with the approach of the summer driving season.
“We’re not looking for a marked increase, but we could see prices higher than last year,” he said.
White said a bigger part of the price equation was increasing demand in the ethanol market, which has pushed prices above $100 a barrel in some markets.
“The demand for ethanol across the U.S. right now is exceeding what’s being produced,” White said. “So there’s likely exports coming in that are helping us balance out the needs at this point.”
AAA and LincolnGasPrices.com don’t track ethanol blend prices, but ethanol prices around the state have been as much as 10 cents a gallon higher than regular, she said. Before the recent surge in demand, the ethanol blend prices had been around 10 cents lower.
Some of the ethanol price increase is being passed on to the price of regular gasoline so ethanol blends won’t become so expensive that people won’t buy it, White said.
AAA said ethanol demand nationwide increased to 13 million gallons per day in December — 1.2 million gallons more per day than the U.S. daily production.
Why the increase in ethanol demand?
The refining industry is introducing ethanol as a substitute for methyl tertiary butyl ether, or MTBE, in summer blends of gasoline, Schenker said.
And White said Hawaii legislators recently passed a bill requiring ethanol in all motor fuels, even though the state’s lone ethanol plant won’t be operating until next year.
In addition, last year’s energy bill created a new requirement for refiners to use more renewable fuels, such as ethanol.
In 2006, 4 billion gallons of renewable fuels must be used nationwide, and that requirement increases annually to 7.5 billion gallons in 2012.
In Nebraska, 12 plants now produce almost 600 million gallons a year. Six ethanol plants are under construction in the state, and about 24 others are on the drawing board.
Many plants have long-term sales contracts that are keeping owners from making hay with the current price spikes. For example, some contracts signed with ethanol buyers last spring were for less than $1.20 a gallon. But industry economists say the ethanol spot market has ebbs and flows that can spike at more than twice the contracted prices.
Ag economists say the same is true for corn farmers, who can lock in prices with ethanol producers in order to guarantee a return or can take their chances with the current markets.
JournalStar
The state price was nearly $2.43 a gallon, compared with $2.33 a month ago and $2.07 a year ago, according to the AAA Fuel Gauge Report. The record high average for regular in Nebraska was $3.20 in September 2005.
Some of the recent increase can be attributed to rising crude oil prices, said Rose White, public affairs director of AAA Nebraska.
Crude oil prices hit $63 a barrel last week, then declined to close Friday at $60.53 a barrel.
A recent OPEC decision to maintain production levels won’t bring motorists any relief, said Jason Schenker, an economist with Wachovia Corp. He predicts retail gas prices could rise with the approach of the summer driving season.
“We’re not looking for a marked increase, but we could see prices higher than last year,” he said.
White said a bigger part of the price equation was increasing demand in the ethanol market, which has pushed prices above $100 a barrel in some markets.
“The demand for ethanol across the U.S. right now is exceeding what’s being produced,” White said. “So there’s likely exports coming in that are helping us balance out the needs at this point.”
AAA and LincolnGasPrices.com don’t track ethanol blend prices, but ethanol prices around the state have been as much as 10 cents a gallon higher than regular, she said. Before the recent surge in demand, the ethanol blend prices had been around 10 cents lower.
Some of the ethanol price increase is being passed on to the price of regular gasoline so ethanol blends won’t become so expensive that people won’t buy it, White said.
AAA said ethanol demand nationwide increased to 13 million gallons per day in December — 1.2 million gallons more per day than the U.S. daily production.
Why the increase in ethanol demand?
The refining industry is introducing ethanol as a substitute for methyl tertiary butyl ether, or MTBE, in summer blends of gasoline, Schenker said.
And White said Hawaii legislators recently passed a bill requiring ethanol in all motor fuels, even though the state’s lone ethanol plant won’t be operating until next year.
In addition, last year’s energy bill created a new requirement for refiners to use more renewable fuels, such as ethanol.
In 2006, 4 billion gallons of renewable fuels must be used nationwide, and that requirement increases annually to 7.5 billion gallons in 2012.
In Nebraska, 12 plants now produce almost 600 million gallons a year. Six ethanol plants are under construction in the state, and about 24 others are on the drawing board.
Many plants have long-term sales contracts that are keeping owners from making hay with the current price spikes. For example, some contracts signed with ethanol buyers last spring were for less than $1.20 a gallon. But industry economists say the ethanol spot market has ebbs and flows that can spike at more than twice the contracted prices.
Ag economists say the same is true for corn farmers, who can lock in prices with ethanol producers in order to guarantee a return or can take their chances with the current markets.
JournalStar
posted by Ottawa Gas Prices | 4:07 PM
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