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Ethanol Boom May Stifle US Gasoline Demand
By Mr Ethanol | February 15, 2008
Reuters:
While debates heat up on whether ethanol will ever be “green,” one aspect of the alternative fuel is becoming clearer: explosive production is stifling an established driver of oil markets — U.S. gasoline demand — and could lead to lower prices at the pump.
The ethanol boom comes just as U.S. oil refiners, who had been struggling for years to keep up with rising fuel demand in the world’s largest energy consumer, begin to catch up by adding surplus capacity. Together, these factors could help reverse gasoline supply tightness that has driven fuel prices higher, particularly during the petroleum rally of the last five years.
“Ethanol blending could help ease U.S. refining bottlenecks and that could be ultimately reflected in lower prices at the pump,” said Eric Wittenauer, an analyst at AG Edwards in St. Louis.
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