Choking On Ethanol And High Gas Prices

The high price of gasoline is prompting calls for a fresh look at the nation's renewable fuel standards.

In 2007, Congress set an ethanol mandate, requiring the use of 36 billion gallons by 2022. Refiners either must use a set amount of ethanol in their gasoline or purchase credits. Between the weak economy and more fuel-efficient vehicles, people are using less gas than Congress imagined. But the mandate hasn’t changed.

“The problem now is there literally are not enough gallons of gasoline being sold to stuff all of the required gallons of ethanol into.”

Bill Day is a spokesman for Valero. He says with refiners unable to use the ethanol required, the demand for credits — and the price — has spiked. That’s showing up at the pump.

“If you’re going to have a renewable fuel standard, have it be something that’s applicable to the amount of gasoline being used. Don’t just pick a number at random, because that’s literally what happened.”

Day says Valero is caught in the middle. In addition to being the world’s largest independent refiner, the company is also the second-largest producer of ethanol.

Letter from Sen. Ron Wyden (D-OR), chairman, Senate Energy and Natural Resources Committee, to Acting EPA Administrator Robert Perciasepe

Letter from Sen. David Vitter (R-LA), ranking member, Senate Environment and Public Works Committee, and Sen. Lisa Murkowski (R-AK), ranking member, Senate Energy and Natural Resources Committee, to Assistant EPA Administrator Gina McCarthy

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...