Across the Midwest drivers are experiencing sticker shock with gasoline prices increasing an average of more than 40 cents-per-gallon since July 1, 2007.

Shell-shocked consumers are entering their third week of escalating gas prices thanks to a shortage of petroleum refining capacity that is being driven by Mother Nature.

“While the nation’s ethanol biorefineries have been expanding rapidly, we have seen no new oil refineries built in the United States. in well over three decades. Refining capacity is so tight that any interruption, like the flooding and lightning related fire incidences that recently closed some refineries, can send gasoline prices out of control,” said Steve Ruh, president of the Illinois Corn Growers Association.

“If these shortages persist, my fuel stations could run low on fuel supplies,” said Gary Wright, vice president of Wright Oil, Inc., based in Central South Kansas, while waiting in line for several hours to refill his supply tanker. “My current gasoline price is $3.36 but my 85 percent ethanol-blend is selling for $2.80 per gallon. With the number of ethanol plants producing in my area, I will be able to keep my E85 price stable.”

The U.S. gasoline demand has outpaced its refining capacity. Globally, an estimated 84 million gallons of gasoline are refined per day, but an equal number of gallons are used. This leaves the world unable to create excess supplies necessary to deal with unplanned disruptions that limit supply.

“At a time when global gasoline demand continues to rise, the unfortunate occurrence of multiple weather related incidents, affecting the Midwest oil refining industry, are further highlighting this country’s need for diversification of our transportation fuel needs,” said Tom Slunecka, executive director of the Ethanol Promotion and Information Council (EPIC).

“In the region hardest hit by these incidences, like Illinois, the ethanol industry has been providing alternatives to petroleum-based gasoline refineries.

This demonstrates renewable fuels like ethanol and biodiesel are essential to continuing economic viability and the American way of life. Without the expansion in ethanol capacity in recent years these price shocks would be even worse,” Ruh said.”

Other states affected by the refinery disruptions include: Nebraska, Kansas, Missouri, Oklahoma, Minnesota, North Dakota, South Dakota, Iowa, Indiana, and parts of Ohio.

The ethanol industry has grown to produce over 5.5 billion gallons emanating from more than 100 ethanol production plants diversely located across the same region. To learn more, visit www.ilcorn.org or www.drivingethanol.org

Steve Ruh
Illinois Corn Growers Assn.

This farm news was published in the July 18, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.