- President Donald Trump is proposing removing restrictions on the sale of gas with 15 percent ethanol.
- Ethanol is made from corn, so farmers support the move, but there are concerns about air pollution.
- The price at the pump might only go down a few cents if the restrictions are removed.
President Donald Trump wants to allow sales of gasoline
with 15 percent ethanol, known as E15, year-round. Current law
prohibits the sale of E15 during the summer — gas in the summer must
contain no more than 10 percent ethanol — because the higher ethanol gas
can produce more smog in warmer weather.
Farmers are lauding Trump’s plan because it would increase the demand for corn, a welcome change since prices have dropped due to Trump’s trade tariffs. An expected potential increase in ethanol demand from China has been stalled by China’s retaliatory tariffs on U.S. goods.
Although
the percentage change could reduce the cost of a gallon of gas at the
pump, the price difference is likely to be minimal.
Why Higher Ethanol Gasoline Won’t Dramatically Lower Prices
Sal
Gilbertie, president and chief investment officer at Teucrium Trading
LLC, said in an interview with MarketWatch that “a gallon of ethanol is
about 70 cents cheaper than a gallon of gasoline, which means adding 5
percent more ethanol will reduce the price of a gallon of gasoline by
about 3 ½ cents.” If demand for ethanol increases, the price could go
up, negating the price advantage altogether.
GasBuddy reports that the average price for a gallon of regular unleaded gas in the U.S. was $2.904 on Tuesday, Oct. 9. Last year, the average was $2.472.
E15 Fuel Won’t Necessarily Help With High Summer Gas Prices
Ethanol
isn’t the only factor in the changing price of gas from summer to
winter. There is a higher demand for gas in the summer, but that’s just
one factor. Summer-blend fuel is more expensive to make because the
process takes longer and yields less per barrel of oil. These costs can
tack on an estimated 3 to 15 cents per gallon, according to NACS, a
convenience store and fuel retail advocacy group.
Potential Benefits of Using E15 Year-Round
According
to the Iowa Renewable Fuels Association, E10 represents 97 percent of
the gasoline sold in the U.S. The association said that E15 is “an
environmentally friendly fuel that burns cleaner than gasoline,” and
that raising the blend from E10 to E15 would “accelerate the use of
renewable fuel, increase energy security, create U.S. jobs, reduce transportation costs, and improve the environment by displacing conventional gasoline with low-carbon ethanol.”
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