From food riots and revolutions to gas prices and pump labeling, the implications of ethanol are far and wide. In this week’s news roundup, we look at the diverse effects of the RFS, and the ways in which ethanol mandates affect not only the United States, but also those around the world.
- Platts, “Maddening” US ethanol prices mimic RINs volatility: What better way to understand ethanol RINs (Renewable Identification Numbers) than by comparing them to high school politics? And Platts could not have depicted a more accurate picture of this “wacky” market by doing so. As RINs continue to play an increasing role skewing the marketplace, we are seeing an effect on gas prices and can expect “explosive volatility” at the pump this driving season.
In Short: “US ethanol prices in 2014 have become what RINs were in 2013 — volatile and downright wacky. In the opening three months of 2013, biofuels RINs went from the nerdy kid in freshman biology to a menacing and eccentric upper-classman that scared all the other kids in the cafeteria.”
- Courthouse News Service, FTC to Require Detailed Alternative-Fuel Labels: Much like the warning labels we see on electric devices, The Federal Trade Commission (FTC) has proposed “new labeling requirements for blended gasoline to help consumers find the correct fuel for their cars.” With the devastating effects that ethanol can have on your vehicle and other small engines, consumers need to know what they are putting in their engines to avoid impending damage.
In Short: “The proposed labels would also contain the disclosures "may harm some vehicles" and "check owner's manual," because cars continue to have varying ethanol tolerances, which require more precise disclosure, according to the Alliance of Automobile Manufacturers, which was quoted in the action.”
- MarketWatch, Ethanol price spike means you pay more for gasoline: Just in time for this summer’s driving season, gas prices are on the rise! While ethanol proponents tout its ability to lower gas prices, it’s actually increasing the cost per gallon to our fuel supply. We see this correlating relationship as consumer gasoline prices continue to rise and fall with ethanol’s price. Per the report, ethanol prices shot up 22% in March.
In Short: “Blending a $4-a-gallon product (ethanol) with a $2.50-a-gallon product (gasoline) has resulted in increases in the price of finished motor fuel, Kloza said, adding that high-priced ethanol has added about 10 cents a gallon or more to gas prices in recent weeks.”
- Slate, A Revolution Marches on Its Stomach: In this Slate analysis, author Joshua Keating highlights the varying indicators of global unrest with one being the price of grain. To meet the growing demand of ethanol and other such biofuels, many countries, including the United States, divert food resources – corn and grain – to meet those government mandated levels. As Keating notes, this is having a tremendous effect on worldwide stability.
In Short: “The United States as a whole grows more soybeans than China. And due to generous federal subsidies for ethanol, the United States isn’t even growing nearly the amount of food it could. Forty percent of our corn is going into fuel.”