What is in this article?:
- Ethanol's Role in Reducing Gas Prices
- Role of Ethanol
Gas prices are dominating the headlines and we have yet to embark on the summer driving season, the traditional kick-off to high gas prices. With Congress holding hearings this week on gas prices, the president holding a press conference today, voters taking to the polls today and the energy world gathering in Houston this week, RFA's Vice President of Research and Analysis Geoff Cooper has analyzed the data to provide background information on the downward pressure exerted by domestic ethanol production on gasoline prices. A complete download of this RFA Issue Brief in pdf form is available.
Retail gasoline prices are again on the rise, recently reaching their highest level since May 2011. The national average retail price for regular grade gasoline hit $3.79/gal. last week, 27¢/gal. higher than at the same time last year and $1.04/gal. higher than the same week in 2010. (1) Prices along the coasts are even higher, with California drivers paying an average of $4.36/gal. and New Yorkers spending $3.96/gal. for regular gasoline. As gas prices typically ramp up in April and May, many analysts are concerned that today’s high gas prices will spiral even higher in the coming months. Experts predict drivers in some parts of the country may be paying as much as $5/gallon by Memorial Day. (2)
The recent run-up in fuel prices is occurring even as gasoline demand has fallen to its lowest point in more than a decade. Tensions in Iran and Syria have prompted speculative investors to raise their stakes in the oil market, which has translated to higher crude oil prices. Nearby crude oil futures hit $109.77/barrel on Feb. 24, the highest price since early May 2011. These higher crude oil prices, along with refinery closures in the eastern United States, have sparked higher gasoline prices from coast to coast. Noted officials and economists, including Federal Reserve Chairman Ben Bernanke, have recently warned that the surge in oil and gasoline prices significantly threatens the nation’s budding economic recovery. (3)