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Ethanol Supplies Gives Consumers A Price Cushion
By Mr Ethanol | October 16, 2007
CattleNetwork:
Gasoline prices are being held down despite high oil prices in part by rising supplies of ethanol, according to an Associated Press story out over the weekend. Ethanol production jumped 34 percent to 13.1 million barrels a month in July, the latest month for which data is available, from July 2006, according to the Energy Department’s Energy Information Administration.
Ethanol supporters have been pointing this out for years, but it is rare to see this corn contribution in print. The article also pointed out how strange the oil business can be pointing out a surprising “casualty of the escalating cost of crude and sagging pump prices turns out to be the oil industry itself. Even as oil futures set a new record north of $84 a barrel last week, a number of refiners warned that their third-quarter profits won’t be as robust as once expected.”
Don’t cry too much because they are still making lots of money. Some forecast call for an 8-9 percent drop in profits this quarter from a year ago, but this decline is from record profits last year. Part of the problem is that oil prices are being set in part by the markets which recognize how unstable our fuel situation really can be. Political unrest of the vagaries of weather in the wrong part of the world and oil supplies tighten up in a hurry. Take that speculative factor out of pricing however, and what you have is a seasonal drop in driving demand that can’t rationalize the high oil price.
Topics: Ethanol Prices |
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