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Ethanol Plays Role in Latest Gas Price Hike: Analyst

Many gas stations in the Champaign-Urbana area started the week by bumping up the price for a gallon of Regular gasoline from about $3.54 to around $3.79.

An analyst with the price-tracking website GasBuddy.com says the price hikes have hit parts of Indiana and Michigan as well.

Patrick DeHaan says that what makes this particular price hike unusual is a recent spike in wholesale ethanol prices. Ethanol is usually priced lower than gasoline, but the corn-based fuel became the more expensive one in recent days. Gasoline at the pump contains about 10% ethanol --- and DeHaan says the wholesale price spike added 12 to 15 cents to the retail price-per-gallon. But he adds that there is good news for motorists ahead.

 “We are watching ethanol prices that have receded to start the week”, said DeHaan. “In fact, the drop in ethanol prices really started last Thursday. So this hike --- which we’re blaming on ethanol prices of last week --- may be short-lived.”

DeHaan says problems with weather and railroad network logistics caused the wholesale price of ethanol to rise last week to around $3.85 a gallon --- around a dollar higher than wholesale gasoline prices. But Monday prices on the Chicago Mercantile Exchange show May futures prices for ethanol are now back below gasoline prices.

DeHaan says other factors in the latest price increase could include oil refineries going offline to prepare for manufacturing summer blends of gasoline.

Categories: Energy