House Happenings: Ethanol’s impact on gas prices

As prices continue to rise on local fuel pumps, people I know are sharing several speculative opinions about the reasons for $3 fuel. Some are even suggesting that it is partly because the Missouri General Assembly passed an "ethanol mandate" during the past session, but I don’t think that’s contributing very much too current pricing.

Governor Blunt signed HB 1270 and 1027 into law last week which establishes the Missouri Renewable Fuel Standard Act. It is true that the bill requires that nearly all gasoline sold in Missouri will contain at least 10 percent ethanol blend with petroleum based gasoline. Missouri would become the fourth, or perhaps the fifth state, to enact such a policy.

There are some factors that prevent Missouri’s ethanol mandate from having much, if any, impact on fuel prices at the pump; at least not yet! First of all, the requirement does not take effect until Jan. 1, 2008. That’s right, not for another eighteen months. Provisions also indicate that if a distributor is unable to purchase ethanol blended gasoline for the same or lower price than unblended regular gasoline, then it would not be a violation of this act for distributors to buy and resell unblended gasoline (that means no ethanol in it). There are several complications with that option including availability of different grades of fuel at the terminal. Blending ethanol allows the use of a substantially lower grade of gasoline that would not be satisfactory for use by itself. Terminals may be filled with the lower grade, depending on the addition of ethanol, in order for the lower grade to meet fuel standards; consequently, they may not have large volumes of "regular unblended" as we know it today. Price is not as relevant if one grade is simply unavailable.

If the ethanol mandate is not primarily responsible, then what is? Also, what can we do about it? I tend to agree with those who believe high fuel prices are primarily created by close relationships between world (national) government leaders and those who control the oil as it comes from the ground. Sometimes both sides of the equation are actually the same people.

You may not believe you can do anything about fuel prices, but I believe you can. Reactions may not show immediately, but if you get involved, you can make a difference. Contact your elected officials – ALL of them; city, county, state, and especially, federal. Ask all those local officials to pass your concern on to the federal government leaders. Their policies make a difference and, lately, they’ve been hearing mostly from the special interests of "oil" rather than "the people they are supposed to serve".

If we can assist you during the interim with questions or concerns regarding any issue, please feel free to contact Pam at the Jefferson City office. Our number there is 573-751-1649 and the email address is [email protected]. You can also contact me at the district office at 660-359-3988.