PO Box 1146
Salida, CO USA  81201
(719) 539-0300
Fax: (719) 539-0301
info@bbibiofuels.com  

Posted on  

May 21, 2003

California: Ethanol Transition Went Well

Surging California fuel prices were not caused by the state's switch from MTBE to ethanol-blended gasoline. According to the U.S. Energy Information Administration, the transition to ethanol went smoothly for companies making the change.

A May 9 report from the EIA said the high prices were the result of tight supplies and several unexpected refinery outages. In addition, market segregation between ethanol and MTBE blenders affected prices. The EIA concluded that the price spike only reached record levels because the previous factors occurred when crude oil prices were extremely high.

Except for the added pressure from the crude oil prices, the price spike resembled historic (non-ethanol use) price spikes.

"[T]he California gasoline price spike of early 2003 was actually less severe than those seen in 2000 and 2001, both in terms of the spread between spot gasoline and crude oil prices, and between California and Gulf Coast spot gasoline prices," the report said.

The EIA "2003 California Gasoline Price Study: Preliminary Findings" report said the segregated fuel market limited independent marketer access to the supply, which reduced their ability to place downward pressure on gasoline prices.

Delaying the California MTBE ban set the stage for the segregated market, said Monte Shaw, communications director for the Renewable Fuels Association. Even though the California market remains segregated due to hold- out MTBE blenders, once the refinery problems were resolved, wholesale gasoline prices returned to normal levels.

Source: High Plains Journal

Click here to see previously posted News items in our Archive