Bloomberg: Ethanol Stays in Gasoline Even If Mandate Ends
Ethanol, the best-performing energy commodity this year, is cheaper than gasoline, encouraging refiners to use the biofuel even if President Barack Obama’s administration ends a requirement to do so.
A 48 cent-per-gallon discount to gasoline provides companies including Exxon Mobil Corp. and Valero Energy Corp. (VLO) an opportunity to profit by blending the corn-based additive into fuel, while easing prices at the pump for consumers. Marketers may use ethanol as they look for the cheapest way to boost engine performance and reduce pollution.
The biofuel has been blended into more gasoline than ever this year, Energy Department data show.
“It’s just ingrained in the supply and distribution and it’s having a moderating effect on pump prices,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “As long as they were still allowed to use it, most would. The lower price and just the logistics of taking it out, most would still use it.”
Denatured ethanol for September delivery slipped 0.4 cent to $2.660 a gallon in electronic trading today on the Chicago Board of Trade. It’s climbed 21 percent this year, more than the 16 percent gain for gasoline on the New York Mercantile Exchange.
Cheaper Than Gasoline
Still, the biofuel is 15 percent cheaper than gasoline with which it’s mixed, known as RBOB, or reformulated blendstock for oxygenate blending. Nymex gasoline extended gains today after rising 1.3 percent yesterday to $3.1042, a 16-week high.
A Democrat who cares for the working and middle classes has not choice but to do the right thing. Period
Under the fourth option there, the EPA allows a fairly big relaxation of the ethanol rule next year. (A waiver this year is unlikely.) Refiners are required to use 25 percent less ethanol. And ethanol producers can carry over their credits from previous years. In that case, corn prices could drop more than 20 percent, to $6.56 per bushel. That’s about where corn prices would have been if we only had a “weak drought” this year. In other words, by relaxing the ethanol rule, the EPA could essentially turn a “strong drought” into a “weak drought” as far as prices are concerned.
"Still, the biofuel is 15 percent cheaper than gasoline with which it’s mixed, known as RBOB, or reformulated blendstock for oxygenate blending. Nymex gasoline extended gains today after rising 1.3 percent yesterday to $3.1042, a 16-week high."
As we all know on this board corn based ethanol has at best 66% the enegry contenct of gasoline.
This means of course corn based ethanol costs over $4 when adjust for energy content. Obama allows refiners or actually forced refiners to take advantage of purposefully uninformed Americans.
Nothing traditionally American about Obama behavior here. Nothing at all.
Congratulations RP! YOu have proven Businessweek is not an information source which can be trusted! Good for you!