The Big Pinch
The average price of gas in America looks ready to cross the $4 line.
Weekly data released yesterday by the Energy Information Administration pegged it at $3.97 — up 82 cents a gallon from the same week last year.
This is the consequence of oil recently surging past $130 a barrel.
And yet a coalition of vocal biofuel opponents is agitating to cap or roll back biofuel production. What would that do to the picture?
Economist John Urbanchuk calculates the initial impact of taking biofuels off the market would be to jack up the price of oil another 27.5 percent.
Urbanchuk has also calculated that waiving half the renewable fuel standard, as Texas Gov. Rick Perry has proposed — and thus removing 4.5 billion gallons of ethanol from the U.S. market — would cause gas prices to spike an additional $1.10 per gallon.
And consumers thought they were feeling a pinch at the pump now…
Sources:
Energy Information Administration. “U.S. Retail Gasoline Prices.”
“Impact Of Ethanol On World Oil Demand And Prices,” by John Urbanchuk, LECG, LLC. May 27, 2008.
“Impact of Waiving the Renewable Fuel Standard Provisions of EISA 2007 on Retail Gasoline Prices,” by John Urbanchuk, LECG, LLC. May 1, 2008.
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