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EIA Changes Energy Story, Says Enough Ethanol For MTBE Switch

The Energy Information Administration backed off some of its earlier predictions concerning the impact gasoline refiners voluntary switch from methyl tertiary butyl ether to ethanol would have on consumer gasoline prices this summer.

At a press conference Tuesday to release EIA's Short-Term Energy Outlook, EIA Administrator Guy Caruso says consumers can expect gasoline prices to be 25 cents higher on average this summer. Caruso attributed 19 cents of that increase (or 76%) to high world oil price and says that the increased use of ethanol would affect gasoline prices by "just a few pennies."

Renewable Fuels Association President Bob Dinneen says the report is a more accurate reflection of the nation's gasoline supply situation. In an initial report issued in February, EIA expressed serious concerns about the adequacy of ethanol supplies and the ability of ethanol producers and marketers to deliver ethanol to the markets that need it.

"With oil prices near $70 a barrel and refining capacity still struggling to come back online, it's clear that those factors have far more to do with consumers paying more at the pump than the increased use of ethanol," Dinneen says.

Dinneen adds that gas prices would go "through the roof" if the ethanol industry and availability of ethanol weren't at the levels they are. "Compared to other octane enhancers, ethanol remains the most viable and economic choice," he adds.

At Tuesday's press conference, Caruso echoed what many in the ethanol industry have been saying, noting that ethanol supplies will be adequate and will come from rapidly increasing domestic production, diversion of ethanol from discretionary blending markets and increased imports where needed. Caruso also notes the efforts being made to deliver ethanol to these new MTBE-replacement markets.