Yahoo! Finance: How Washington Could Push Gas Prices Higher

August 13, 2013

Rick Newman, August 12 – No politician would run for office by calling for higher gasoline prices. Yet policymakers in Washington may be on the verge of causing some pain at the pump for consumers.

Most Americans don’t realize that, when they gas up their car, up to 10% of what goes into the tank is ethanol distilled from corn. Congress required refiners to blend ethanol into gasoline in laws passed in 2005 and 2007, which were intended to spur the production of renewable fuels and reduce U.S. dependence on foreign oil.

But driving habits, automotive technology and the overall economy have changed in ways nobody anticipated back then, making federal ethanol targets harder to meet without disruptive changes that could cost drivers more. Fixing the problem requires bipartisan Congressional action, the very thing that seems most scarce in Washington these days.
“There are benefits to ethanol,” says Avery Ash, manager of regulatory affairs at AAA, the driving club. “But motorists need to make an informed decision that doesn’t put them or their vehicles in danger.”

Under the 2005 and 2007 laws, refiners must add an increasing amount of ethanol to gasoline every year until 2015, when the overall ethanol target is scheduled to hit 15 billion gallons per year and stay there. When legislators wrote the law, they assumed gas consumption in the United States would continue to grow at the same pace as during the prior decade. So the ethanol target could grow, too, without a big jump in the proportion of ethanol in gasoline.