Posted in: Opinion,
by Patrick DeHaan on Apr 27, 2012 11:55 AM
Motorists beware- more refineries may close in the years ahead, thanks to former President Bush signing requirements of rising use of ethanol and other biofuels each year, essentially guaranteeing farmers higher prices for their corn as more ethanol is required each year.
The issue here is essentially the government picking winners and losers- oil based refineries will lose while biofuels facilities will win- because of prior law requiring an increasing amount of ethanol use every year, which will result in a drop in demand for gasoline as its becomes replaced with EPA-approved E15.
Motorists should be prepared for higher gas prices and even more volatility in the price of gasoline as capacity of gasoline production drops due to the rising use of biofuels. Traditional refineries will suffer as conventional gasoline becomes replaced by production from ethanol and other biofuels refineries.
I can't think of a more shortsighted policy by the previous administration, rising use of corn based ethanol not only will cause food prices to rise as farmers utilize their land for ethanol grade corn, but cause other commodity prices to rise because of the trickle down effect.
The problem will soon become that even higher concentrations of ethanol will be required because of the way the law is written- it specifically states the number of gallons that must be produced each year, and with overall demand dropping, ethanol concentration may continue to be boosted to meet blending laws that require the use. I can't wait.