U.S. ethanol prices have surged over the past week weeks, rising past the price of conventional gasoline for the first time in over two years as rail networks across the country slowed shipments.
Slow moving trains have forced ethanol producers to trim back production, which has led ethanol inventories to drop to levels just above record lows that occurred in 2010.
Ethanol values were seen over $3/gallon for much of the country while gasoline spot prices remain in the $2.70's per gallon before taxes, meaning the high cost of ethanol and the requirement to blend ethanol into conventional gasoline is pulling retail gasoline prices higher.
Due to the spike in ethanol prices, its likely that fuels with higher levels of ethanol may see the spike even worse than what's happening to gasoline blended with 10% ethanol. E85 prices could rise sharply from levels seen several weeks ago.
While it may take several weeks to get logistics sorted out, motorists will be paying more for gasoline containing ethanol, which is a required blending component in most of the nation's gasoline.