Last fall, Congress passed energy legislation mandating a seven-year ramp up in the amount of biofuel blended into the nation's gasoline stocks, beginning with nearly 4 billion gallons in 2006 and rising to 7.5 billion gallons in 2012. Ethanol is expected to fulfill most of this requirement.
Additionally, numerous states that use reformulated gasoline have banned the use of ethanol's only commercial competitor, methyl tertiary butyl ether, or MTBE, which has been found to contaminate underground water supplies.
Congress also decided not to include a liability waiver in the energy bill to protect refiners that blended MTBE into gasoline from lawsuits stemming from contamination. This has touched off a rapid phase-out of MTBE from gasoline stocks ahead of May when the renewable fuel provisions in the energy bill kick in and refiners say they face liability exposure.
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By January of this year, the domestic ethanol industry was producing 288,000 barrels a day, the most recent month for which figures are available. The Renewable Fuels Association says domestic producers have the capacity to deliver at least 4.5 billion gallons this year, more than the bump up mandated by the energy legislation.
But the renewable fuels mandate coupled with the phase-out of MTBE and state fuel requirements is expected to produce a need for about 395,000 barrels of ethanol a day, or 6.1 billion gallons in 2006, according to the Energy Department.
Keep in mind the 1.6 billion gallon shortfall, expanded to gallons of fuel represents 16 billion gallons of 10% ethanol fuel which simply cannot be formulated using domestic stocks or supplies, even in a best-case scenario.
Which translates into imported ethanol, which has a tarrif on it, imposed by Congress.
With just a little background info, you see where some of the price problem at the pump is coming from.
Between the Federal fuels taxes and ethanol tarrifs, guess who is digging deeper into your pocket than the oil companies' profit margin?
The boutique fuels requirement needs to be scaled back for the time being until the ramp up is completed to ease shortages of ethanol.
I would think this is doable by executive order.
This is just one thing the president can do regarding this situation.
This administration has a terrible communications/political coordination effort and is always a day late and a dollar short.
Running around and making BS platitudes like "we are addicted to oil" and "there is no magic solution" just does not cut it with people that are looking for a leader to do something even if it is just better communication with the citizens.