LOS ANGELES -- The Consumer Federation of America (CFA) has called on the oil industry to be more open to ethanol as a means of assuaging gasoline prices, reported UPI.
In a report, Over a Barrel: Why Aren't Oil Companies Using Ethanol to Lower Gasoline Prices?, the CFA chastised the oil industry for allegedly stonewalling the idea of using ethanol to stretch out the supply of fuel.
Click here to view the report.
The major oil [image-nocss] companies are reaping huge windfall profits while consumers across the nation are facing the highest gasoline prices in recent memory, said Mark Cooper, the CFA's director of research. Oil companies in many parts of the country easily can blend ethanola high-octane, domestically produced renewable fuelinto gasoline, but have chosen not to. As a result, consumers are paying more than they should for gasoline.
Oil industry executives take issue with this seemingly simple solution to tight gasoline supplies, but the entry of the CFA potentially could make ethanol more palatable to politicians outside the farm states, as the Senate once again considers energy policy legislation and its provisions to increase ethanol consumption.
The CFA report concluded that by bumping up the amount of ethanol used in a gallon of gasoline to 10%, the average price of regular could be cut by some 8 cents.
Cooper said retail gasoline-price reductions certainly would differ from region to region, but the overall impact of boosting ethanol consumption would be lower gasoline prices and a tangible step toward the elusive goal of using less oil.
It is a policy question, Cooper told reporters on a conference call last Thursday. We have had it explained to us that America has to make hard choices in terms of energy, but as long as the policy makers and the oil industry don't do the simple things, it is harder to convince people to do the harder things.
The CFA chalked up the industry's reluctance to jump on the ethanol bandwagon as a sign of lack of competition and a desire to maintain what has been, of late, a very profitable status quo. Ethanol, Cooper said, would probably be in wider use if the oil companies were competitive at the refinery gate and at the pump, but the fact is that they are not very competitive.
At the same time, he argued, ethanol prices have fallen. We think there is a competitive market in ethanol that, unlike the oil industry, has become more competitive.
Oil industry officials might take exception to the notion that ethanol is a cheap and easy ingredient to add to gasoline. Ethanol's chemistry makes it impossible to ship by pipeline, so it must be blended with gasoline at the terminal, where it is loaded into tanker trucks and then hauled to the local gas stations.
Bob Slaughter, president of the National Petrochemical & Refiners Association (NPRA), said the added logistics costs play a large role in a refiner's decisions whether to use ethanol. They use ethanol when it is economical, Slaughter told UPI. We are no slouches when it comes to using ethanol, but it doesn't fit everywhere and every time.
Cooper, who said the CFA was not affiliated with the ethanol industry, urged Big Oil not to wait for Senate's vote on energy legislation expected later this month and instead should drop its cautious approach and embrace ethanol. An [ingredient] that is lower in price should be finding its way into the marketplace, he said.
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