Deleting ethanol from U.S. fuel production systems would hard consumers

Times-Republican (Iowa)
COMMSTOCK REPORT
By DAVID KRUSE
POSTED: July 28, 2008

With so much public focus being put on oil and gasoline prices, it's difficult to imagine EPA doing anything that would send pump prices higher, potentially sharply higher. While many impacted by corn prices are "whining" as Phil Gramm puts it, the ethanol industry has become a large enough part of the U.S. fuel production system that deleting it now would have an unequivocally worse impact on consumers from raising pump prices than it has had in raising food costs.

No matter how much oil there is, there is a finite capacity in the U.S. to refine petroleum. The failure to build new petroleum refineries in the U.S. limits the U.S. ability to grow gasoline or distillate production to meet demand. While it's little talked about, ethanol made a significant contribution to U.S. refinery capacity. Albeit, ethanol plants refine corn into ethanol, the concept and result is the same.

Ethanol plants are refineries. They were a welcome expansion to U.S. refinery capacity. They are strategically located away from the Gulf where U.S. petroleum refineries are concentrated. That makes them less vulnerable to Gulf hurricanes, a strategic benefit. Ethanol production has added enough to U.S. motor fuel supply to have a significant impact on prices from boosting aggregate motor fuel production.

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