‘Cheap’ ethanol seen as potential blunt to gasoline price shocks

Source: By Kim Chipman and Chunzi Xu, Bloomberg • Posted: Monday, February 28, 2022

      Excess U.S. ethanol reserves could help ease skyrocketing prices at the gasoline pump, especially if war in Ukraine leads to further spikes. “Ethanol is currently 50-60 cents per gallon cheaper than gasoline at most terminals, and we think that spread will continue to widen in the weeks ahead,” said Geoff Cooper, head of the Renewable Fuels Association, a U.S. trade group for the corn-based biofuel industry. Oil climbed above $105 a barrel for the first time since 2014 on Thursday as Russia attacked sites across Ukraine, triggering fears of a disruption to energy exports at a time of already tight supplies. Concern that gasoline prices could surge higher is prompting U.S. ethanol advocates to call for government policies allowing broader reach of the corn-based fuel. This would require the Biden administration to take “modest” steps to allow higher amounts of ethanol to be mixed into the fuel supply year-around in existing equipment, Cooper said.

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