Editorial: Time to review ethanol

If you thought gasoline prices are high now, just wait until summer.

But, you might ask, with gasoline consumption down and oil production up, what’s keeping fuel prices hovering between $3 and $4 a gallon with more hikes on the horizon?

A likely contributor is the escalating price of federally mandated ethanol credits that could cause a $13 billion jump in the cost of gasoline this year. Fuel manufacturers buy and sell the credits to meet the Environmental Protection Agency’s rising renewable fuels standards.

The EPA in 2010 allowed manufacturers to blend gasoline with up to 15 percent ethanol, up from 10 percent, in an effort to help them reach the standards. But some auto manufacturers won’t honor warranties if more than 10 percent ethanol gasoline is used, and that means refiners can’t meet the standards for 2013. So they buy credits to cover part of the federal requirement.

Since the beginning of this year, the cost of the credits has risen from about 7 cents each to more than $1.

So, while consumers use less gasoline, refiners are paying for ethanol that isn’t going into fuel.

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And they’ll surely pass on that cost.

It’s just another wrinkle in the increasingly odd story of ethanol, which seems to be as much about politicians protecting Midwest farmers as it is about saving the environment.

These policies have not only been costly to fuel consumers but have contributed to skyrocketing food prices as fertile land and copious amounts of water are used to grow corn for ethanol instead of for livestock feed or for other food products.

It’s time to rethink the use of ethanol and the renewable fuels program overall.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.

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