Friday, March 31, 2006

The Cost Of Freedom - The Home Front

Photo: Shell Oil in Kowloon, Hong Kong c 1988

This from USA Today-

Ethanol shortage could up gas prices
By James R. Healey, USA TODAY Thu Mar 30, 6:45 AM ET


Gasoline prices will be unusually high and shortages might occur this summer, because the U.S. ethanol industry can't keep up with the demand for fuel-grade alcohol to mix with gasoline, the head of the U.S. Energy Information Administration told a Senate committee Wednesday.

Merely "short-term challenges," countered Bob Dinneen, president of the Renewable Fuels Association, the ethanol trade group. Whatever can't be produced here can be imported, he said.

But imported ethanol, mostly from Brazil, carries a 54-cents-per-gallon tariff that would boost fuel prices even more, unless it were waived. (Story: Energy independence spurs Brazil to boost ethanol goals)

Ethanol - grain alcohol made mainly from corn in the USA - is being promoted by the auto and ethanol industries and the government as a substitute for gasoline, usually in a mix called E85 that is 85% ethanol and 15% gasoline.
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EIA has forecast summer gasoline prices averaging about $2.50 per gallon, or 12 cents more than last year. It has not, however, directly blamed ethanol shortages.

EIA reported Wednesday that U.S. inventories of gasoline - though still robust - dropped 5.4 million barrels last week, the biggest drop since the week ended Aug. 22, 2003.

The wholesale price of gasoline for summer-month delivery rose several cents a gallon, to about $1.91.

Ethanol, by contrast, ranged from about $2.49 to $2.52.
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Actually, this is good news because some of the fuel consuming public has found a way to participate in the war on terror. Demand is up for E85. This article is just reflecting the cost of freedom on the home front.

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