Federally mandated ethanol credits are getting pricier. Consumers, this means you.

posted at 1:21 pm on March 20, 2013 by Erika Johnsen

It is perfectly true that there are a bunch of factors that together determine the prices we pay at the pump — oil is supplied, bought, and sold in a very global market, after all — and that the federal government doesn’t always have the ability to impact those factors. That said, there are also plenty of ways in which the government can and does influence gasoline prices — and if and when prices spike this summer, you can reasonably lay a very heady chunk of the blame on the Obama administration.

The EPA, you see, simply insists that we must all continue to mix still more gasoline with even higher ethanol blends — and they are really not all that concerned with what that requirement does to prices at the pump.

U.S. drivers may face a $13 billion increase in the cost of gasoline this year as the price of federally mandated ethanol credits has risen 10-fold for oil refiners including Valero Energy Corp. (VLO) and CVR Energy Inc. (CVI)

Fuel processors such as Valero, the world’s largest independent refiner, and Exxon Mobil Corp. (XOM) are pushing the U.S. Environmental Protection Agency to reduce the amount of ethanol they’re required to add to gasoline to avoid what they say will be a sharp spike in prices at the pump just as the summer driving season begins.

Refiners buy biofuel credits, known as RINs, which are available as an alternative to actually blending ethanol into gasoline. The cost of those credits has ballooned from 7 cents at the start of the year to more than $1 as the 2013 federal mandate for biofuel exceeds 10 percent of gasoline sales, the maximum that refiners say the market can absorb. …

Consumers are at risk of paying 10 cents a gallon more for gasoline this year if the ethanol credits continue to sell at a price of more than $1, Roger Read, a Houston-based analyst for Wells Fargo & Co. (WFC), said in a March 11 note to investors.

In a nutshell: If you don’t want to comply with the EPA’s standards, you have to buy credits to excuse yourself; nobody really wants to comply with the EPA’s standards, so the price of the credits is going up.

Critics claim that the spike in credit prices is just the result of some panic-trading, and the average price will eventually settle down somewhere closer to 31 cents — which completely misses the point. Why the heck does the Environmental Protection Agency even have a Renewable Fuel Standard that forces people to buy a product they don’t want to use, at an increased price? Nobody even likes ethanol, except, of course, for Big Ethanol lobbyists and the crony-bureaucrats who love them.

How often are we going to be forced to put up with the EPA’s utter folly and special-interest pandering masquerading as an honest renewable energy venture?


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Stick it to us!

- The Cry of Freedom in Utopia.

OhEssYouCowboys on March 20, 2013 at 1:26 PM

All this crap needs to stop. Ethanol needs to go-away and most of the gas regulations and taxes. The states should be doing this. Not Fed.

TX-96 on March 20, 2013 at 1:27 PM

EPA is a joke but not very funny. Ethanol is hell on engines, my mpg goes down at least 2-3 miles a gallon when I use that stuff. Just wait till it goes to 15%.

major dad on March 20, 2013 at 1:28 PM

How often are we going to be forced to put up with the EPA’s utter folly and special-interest pandering

As long as the dc bunch will allow them to? As long as the dc bunch doesn’t cut funding to them? As long as the dc bunch won’t do away with them?

We citizens can scream our heads off and it still won’t help with the dc bunch!
L

letget on March 20, 2013 at 1:30 PM

Why the heck does the Environmental Protection Agency even have a Renewable Fuel Standard that forces people to buy a product they don’t want to use, at an increased price?

Duh.

Nobody even likes ethanol, except, of course, for Big Ethanol lobby and the crony-bureaucrats who love it.

Question answered.

GWB on March 20, 2013 at 1:32 PM

The left voted to punish the lower and middle classes.

Y’all happy yet?

tom daschle concerned on March 20, 2013 at 1:34 PM

The ethanol edict is one of the most egregious instances of pure theft from the public that the government has ever done. Any moron, with a modicum of intelligence, knows that corn ethanol

ultracon on March 20, 2013 at 1:35 PM

You don’t have to buy ethanol-blended gas. Here’s where you go -in your state- to find the pure stuff. Vote with your wallet.

M240H on March 20, 2013 at 1:35 PM

How often are we going to be forced to put up with the EPA’s utter folly and special-interest pandering masquerading as an honest renewable energy venture?

Let.It.Burn is now more than ever looking to be the only option out of this cluster-f.

Myron Falwell on March 20, 2013 at 1:36 PM

…they are fluking us…and not using any condoms now!

KOOLAID2 on March 20, 2013 at 1:37 PM

Well the good news is gas prices are so low right now that we can afford a spike at the pump.

/

Doughboy on March 20, 2013 at 1:38 PM

sorry, hit the wrong button….

as I was saying, corn ethanol DECREASES MILEAGE, DECREASES HORSEPOWER, AND DAMAGES CAR ENGINES. It is the SUGAR CANE ethanol that Brazil uses that INCREASES MILEAGE, INCREASES HORSEPOWER AND DOES NOT damage engines. However, just like toilets that don’t use water, our vaunted congress is totally, totally, ignorant of the facts and has succumbed to idiot environmentalist whackos that have the agenda of wealth redistribution uppermost on their minds!!!!! God help us…… and save us from liberals. Show me a tree hugger and I will show you an idiot.

ultracon on March 20, 2013 at 1:39 PM

So, where are the Republicans. I know this is good for farmers, but it’s not good for the country. The Republicans should be proposing legislation to deal with this, yet they sit back and do nothing. Why did we elect Republicans to the House? Certainly not for all the good things they’ve accomplished. Boehner needs to go and new leadership installed as soon as possible. The country’s too important to waste on these politicians.

bflat879 on March 20, 2013 at 1:40 PM

It is not good for the country. It increases pollution, causes us to grind food into fuel, and does nothing but INCREASE the cost of gasoline, thereby increasing the cost of everything that is touched by gasoline…….. i.e. groceries. Therefore it is NOT good for farmers…….. total liberal spin, don’t believe it.

ultracon on March 20, 2013 at 1:42 PM

Corn is Food

workingclass artist on March 20, 2013 at 1:42 PM

Commodity Futures Modernization Act of 2000…

That’s the real cause of food price problems… not ethanol.

Washington Fancy on March 20, 2013 at 1:43 PM

How often are we going to be forced to put up with the EPA’s utter folly and special-interest pandering masquerading as an honest renewable energy venture?

At least 4 more years.

rbj on March 20, 2013 at 1:43 PM

…How often are we going to be forced to put up with the EPA’s utter folly and special-interest pandering masquerading as an honest renewable energy venture?

Until Hell freezes over… Le Sigh

Scrumpy on March 20, 2013 at 1:44 PM

Let.It.Burn is now more than ever looking to be the only option out of this cluster-f.

Myron Falwell on March 20, 2013 at 1:36 PM

Problem is it just doesn’t burn as well with the ethanol blend. Hmmm, maybe that’s one of the reasons behind this? Keep the volatility of the Russian cocktails down a bit? Make them a little harder to light?

GWB on March 20, 2013 at 1:44 PM

It requires more energy to produce a gallon of ethanol than that gallon puts out when used. I guess when you have to Do Something(TM) cost and other consequences aren’t relevant factors.

Liam on March 20, 2013 at 1:46 PM

The EPA doesn’t care what the higher % blend of ethanol will do to your engine either.

Aviator on March 20, 2013 at 1:52 PM

Sure glad I drive a Jetta TDI. Diesel prices are heading down for the summer. I have already paid the same as regular gas. The first time that has happened since 2006. I fully expect to be paying 25-50 cents less than regular by Memorial Day as diesel prices drop to $3.80 and regular goes up to $4.25/gal

jerryofva on March 20, 2013 at 1:54 PM

sorry, hit the wrong button….

as I was saying, corn ethanol DECREASES MILEAGE, DECREASES HORSEPOWER, AND DAMAGES CAR ENGINES. It is the SUGAR CANE ethanol that Brazil uses that INCREASES MILEAGE, INCREASES HORSEPOWER AND DOES NOT damage engines. However, just like toilets that don’t use water, our vaunted congress is totally, totally, ignorant of the facts and has succumbed to idiot environmentalist whackos that have the agenda of wealth redistribution uppermost on their minds!!!!! God help us…… and save us from liberals. Show me a tree hugger and I will show you an idiot.

ultracon on March 20, 2013 at 1:39 PM

Sorry but you are mistaken, there is no physical or chemical difference between the ethanol derived from either feedstock, the end result in either case is C2H5OH. Corn based feedstock is more expensive because of land and pre-production costs, but the end product is exactly the same as produced by cane sugar feedstock.

Furthermore, ethanol is not physically damaging to the internal combustion engine, the internal combustion engine was originally designed to run on ethanol.

The Manual for the Home and Farm Production of Alcohol Fuel

by S.W. Mathewson
Ten Speed Press
© Copyright 1980 J.A. Diaz Publications
Out of print

Chapter 1
AN OVERVIEW

ALCOHOL FUEL

There is nothing new in the use of alcohol as a motor fuel. In 1872, when Nikolaus Otto invented the internal combustion engine, gasoline was not available. Ethyl alcohol at 180-190 proof was the specified fuel. The model “T” Ford was designed to run on the available crude gasolines, alcohol, or any combination of the two.

It is the fuel storage and delivery systems that are damaged by ethanol. Vehicles that are designed as “Fuel Flexible” vehicles have no problems running on ethanol.

SWalker on March 20, 2013 at 2:02 PM

“President Obama’s armored Cadillac limo, which was supposed to schlep him around the Holy Land, broke down.

According to Israeli’s Channel 2, the cause of the mishap was a simple error all motorists try to avoid.

“The Americans filled it up with diesel, rather than [gasoline],” the channe quoted a source,…”"

Guess the SS didn’t want Ethanol in the limo either.

via Althouse

Aviator on March 20, 2013 at 2:03 PM

It requires more energy to produce a gallon of ethanol than that gallon puts out when used. I guess when you have to Do Something(TM) cost and other consequences aren’t relevant factors.

Liam on March 20, 2013 at 1:46 PM

This is it. It also cost more per gallon of ethanol than it does per gallon of gasoline. Gasoline won the general purpose vehicle fuel war because it was cheaper to produce and had a higher energy to weight ratio than ethanol did It was a case of pure and simple market dynamics at work.

SWalker on March 20, 2013 at 2:05 PM

Here comes $5 gallon gasoline. And Obama will be happy!

GarandFan on March 20, 2013 at 2:08 PM

Here comes $5 gallon gasoline. And Obama will be happy!

As long as the price keeps rising, Barry’s will be in utter ecstasy once it hits $10/gal and the middle class has been reduced to poverty class, ’cause in his, and the Left’s world, there are only the ruling class and the ruled class.

hawkeye54 on March 20, 2013 at 2:14 PM

Corn is food. Less corn for food means higher food prices. Higher food prices hit the poor the hardest, especially the truly poor in third-world countries, which are dominantly non-caucasian.

Why does the EPA hate the poor brown people?

iurockhead on March 20, 2013 at 2:17 PM

Corn is food. Less corn for food means higher food prices. Higher food prices hit the poor the hardest, especially the truly poor in third-world countries, which are dominantly non-caucasian.

Why does the EPA hate the poor brown people?

Because too many exist, evidently.

Sorta like the unspoken reason DDT was banned.

Acceptable population control.

hawkeye54 on March 20, 2013 at 2:23 PM

http://www.wattsupwiththat.com

Fact is the CO2 scam is a world wide fraud to tax you more.

CO2 is plant food.

Michael Mann is a crook.

Al Gore is still a greedy fat ass.

Calling on

guccifer

Calling all guccifers hack to the facts, and hack the facts bare.

Get Rand Paul to put in a bull shit type CO2, climate change commie Democrat tax and spend redistribution bill in the Senate.

Have Ted Cruz be the fact question guy.

Rand can pretend to defend the bill with the commie Democrat taling points and point to the fake hockey stick.

Ted Cruz and read post from Wattsupwith that.

The msm will have to cover it.

The CO2 fraud would die in a week.

APACHEWHOKNOWS on March 20, 2013 at 2:24 PM

What’s not to like? I hear Oceania is quite lovely in the summer…

I wonder if my truck can run on Victory Gin?

Polish Rifle on March 20, 2013 at 2:25 PM

SWalker on March 20, 2013 at 2:02 PM

You are correct that ethanol itself doesn’t damage engines. That said it is its predilection for attracting water molecules that creates problem. The resultant solution becomes acidic which over long periods of time will corrode the metallic engine parts it comes in contact with.

chemman on March 20, 2013 at 2:26 PM

M240H on March 20, 2013 at 1:35 PMYou don’t have to buy ethanol-blended gas. Here’s where you go -in your state- to find the pure stuff. Vote with your wallet.

M240H on March 20, 2013 at 1:35 PM

Thanks for the timely tip. I already vote with my wallet and I was just yesterday complaining about ethanol to my captive audience of fellow jurors. Since we have not yet entered the deliberation phase, I’m using the time to bring up a variety of topics for discussion. It’s amazing what can be discerned from a randomly picked group of strangers.

MotherGoose on March 20, 2013 at 2:31 PM

No, it is you who is mistaken. You are obviously taken in by the hype from the ethanol lobby and are spouting their meme. Go check what they burn in Brazil and how it works, then go check and see how the crap we are forced to use works. People like you perpetuate liberal myth.

ultracon on March 20, 2013 at 3:26 PM

It is the fuel storage and delivery systems that are damaged by ethanol. Vehicles that are designed as “Fuel Flexible” vehicles have no problems running on ethanol.

SWalker on March 20, 2013 at 2:02 PM

All true.

So if newer flexible vehicles were required to use e20 or whatever even e85 fine. Your point still states those not designed for e15 will be damaged by it. Lawnmowers will not work with E10. It destroys the fuel hose and fouls the carberator.

This is about making the price of gasoline more expensive. Nothing more. That is the intent and it is working. Making it too expensive for the serfs in society to drive. Making America into a Dictatorship where only the very well connected have money. The rest are only serfs with no rights and a single class all very poor completely dependent on government.

Steveangell on March 20, 2013 at 3:40 PM

You are correct that ethanol itself doesn’t damage engines. That said it is its predilection for attracting water molecules that creates problem. The resultant solution becomes acidic which over long periods of time will corrode the metallic engine parts it comes in contact with.

chemman on March 20, 2013 at 2:26 PM

That acid is created by the gasoline and water not the alcohol. E85 would not have that problem E100 would surly not have it Brazil used to have tons of cars using pure alcohol with no problem at all.

Steveangell on March 20, 2013 at 3:43 PM

ultracon on March 20, 2013 at 1:39 PM, Why don’t you get a degree in chemistry, or at this level, and almost as good take freshman chemistry. C2H5OH is the same everywhere. They don’t make a better ethanol in Brasil, but they do in Kentucky. I see from your handle that you are probably a derivative of some pseudo intellectual con artist like beck or paul.

The idea that ethanol wont damage engines because Henry Ford designed his Model T engine to run on it is idiotic. Engines have changed in the last century. Briggs & Stratton, Tecumseh, Continental, etc. engines are damaged by ethanol bearing gasoline.

Ethanol has a specific energy of about 86K BTU/gallon, gasoline has a specific energy of about 116 BTU/gallon. I don’t care whether it comes from Brasil or Lynchburg. Since God told Adam that he could not create or destroy energy, what you say can’t be true. You don’t want to go against God, do you?

In sane thought, SWalker is absolutely right. And I’m an engineer who does not suffer fools gently.

Old Country Boy on March 20, 2013 at 4:21 PM

The must “buy” credits.

Who sells these?

Where does that money go?

Follow the money?

Fleuries on March 20, 2013 at 4:24 PM

That s/b 116KBTU/gal not 116 BTU/gal. apologies.

Old Country Boy on March 20, 2013 at 4:29 PM

How often are we going to be forced to put up with the EPA’s utter folly and special-interest pandering masquerading as an honest renewable energy venture?

Until the pitchforks come out.

Theophile on March 20, 2013 at 6:44 PM

EPA succeeds because they do their damage gradually. That’s how they get away with it. It’s only now that people realize their appliances don’t work–the EPA whittled away their use of power gradually. Same with FDA.

All of the sudden I can’t buy the margarine I want, the fragrance free soap, the detergent. And my new appliances suck. More restrictions are coming in May, but it will be another decade before the companies go under, as people work around and don’t buy new ones. And it will be another decade before people realize the EPA ruined their car engines and raised the price of gasoline too.

PattyJ on March 20, 2013 at 7:13 PM

obviously another name-calling liberal.

ultracon on March 20, 2013 at 7:44 PM

Yeah. Youse guys notice the dishwasher don’t work as well as they used to? Your ice maker is always out. (Pardon the pun) your toilet don’t flush worth a $hit? Your Government Motors silverado sounds like the inside on an M-60 tank? Soap don’t clean? Airline maintenance is going to heck? The freezer or cooler in your grocery store – one of them is always out? Spray cans don’t spray. That is called the EPA, lousy schools, poor maintenance, incompetent design, and entropy.

The Sons of Mary seldom bother, for they ave inherited that good part;
But the sons of Martha favor their Mother of the careful soul and the troubled heart.
And because she lost her temper once, and because she was rude to the Lord her guest,
Her Sons must wait upon Mary’s sons, world without end, reprieve, or rest.

And the Sons of Mary Smile and are blessed – they know the Angles are on their side.
They know in them is the Grace confessed, and for them are the Mercies multiplied.
They sit at the Feet – they hear the Word – they see how truly the Promise runs.
They have cast their burden upon the Lord, and – the Lord lays it on Martha’s Cons.

Rudyard Kipling “Sons of Martha” 1907

Look it up. Read it. Learn something!

Old Country Boy on March 20, 2013 at 7:52 PM

AngELs

Old Country Boy on March 20, 2013 at 7:53 PM

No, it is you who is mistaken. You are obviously taken in by the hype from the ethanol lobby and are spouting their meme. Go check what they burn in Brazil and how it works, then go check and see how the crap we are forced to use works. People like you perpetuate liberal myth.

ultracon on March 20, 2013 at 3:26 PM

Dude, I build dragsters as a hobby. I’m not mistaken nor am I taken in by the ethanol lobby.

SWalker on March 20, 2013 at 7:56 PM

obviously another name-calling liberal.

ultracon on March 20, 2013 at 7:44 PM

You obviously don’t follow Hot Air much. You are funny, in a stupid way. What are your qualifications to make your pronouncements about the way the Brasilians do things? You only answer the HA commenters, who profess their qualifications, with deafening silence. Although, I would appreciate more deafening silence from you. Too much static is irritating. I suppose, because you are an ULTRAcon, you are, like all conservative pharasees, qualified to spout anything in your technical ignorance. If anyone disagrees with you, go ahead, call them a librul.

Old Country Boy on March 20, 2013 at 8:06 PM

Make sure you guys prooofeeeesss all your qualifications. Dragster building my a**, totally in left field when talking about the typical car on the road. Corn ethanol is a politician’s dream. Typical “librul”.

ultracon on March 21, 2013 at 1:57 PM