Gasoline prices soar as ethanol prices jump
October 15, 2010
• Up by a penny per day – or more
• ‘Investors were boosting the prices of ethanol and crude’
Ethanol, the gasoline additive that was supposed to help lessen the nation’s dependence on foreign oil, also has its price spikes, just as crude oil.
And ethanol’s jump in price this week is being blamed for a rapid rise in gasoline prices in California – up by a penny per day or more.
The price spike is blamed not on a sudden craving for ethanol, but on speculators expecting the a finite capacity to make corn-based ethanol in the U.S. will be stretched once a proposed increase to the amount of ethanol that’s blended into gasoline takes effect. The government is proposing increasing the amount to 15 percent from 10 percent.
“The price of ethanol … shot up in the last week and crude oil prices jumped over $80 a barrel, triggering the latest jump in gas prices,” says Jeffrey Spring, a spokesman for the Automobile Club of Southern California.
“Oil industry analysts say that while domestic demand remains sluggish, investors were boosting the prices of ethanol and crude in anticipation of increased international demand,” Mr. Spring says.
The price surge has pushed pump prices well past the year-ago levels in the state. On Oct. 15, California’s average price for a gallon of self-serve regular is $3.132. A year ago it was $3.012, the American Automobile Association says.
Here are Central Valley market averages on Oct. 15, driving from south to north, as reported by the American Automobile Association with last week’s (Oct. 8) averages in parentheses and [Oct. 1] prices in brackets:
• Bakersfield, $3.161 ($3.102) [$3.070]
• Visalia-Porterville, $3.120 ($3.057) [$3.045]
• Fresno, $3.130 ($3.050) [$3.019]
• Merced, $3.141 ($3.073) [$3.031]
• Modesto, $3.088 ($2.985) [$2.943]
• Stockton-Lodi, $3.095 ($3.001) [$2.947]
• Sacramento, $3.100 ($3.017) [$2.958]
• Yolo, $3.128 ($3.025) [$2.975]
• Yuba City, $3.071 ($2.969) [$2.893]
• Chico, $3.063 ($2.986) [$2.921]
The market average price of self-serve regular gasoline in the Los Angeles-Long Beach area on Oct. 15 is $3.117, which is 9.5 cents higher than one week ago, the AAA says. In San Diego, it is $3.132, up by 9.6 cents from last week, the AAA says.
On Oct. 15, the highest marketwide average price for gasoline to be found in California is – again -- in San Francisco where it is $3.210, an increase of 5.4 cents since last Friday, the AAA says.
California’s lowest market average price on Oct. 8 is in Yuba City, where it’s $2.969, but that is an increase of 7.6 cents since last Friday, the AAA says.
A BP-owned Arco station in Victorville has posted what might be the lowest cash price for gas in California on Oct. 15 -- $2.75, according to the website GasBuddy.com.
And the first breath of $4 gas comes from a 76 station in the San Diego neighborhood of Point Loma, where the operator is demanding $3.99 per gallon on Oct. 15, says GasBuddy.
South Carolina continues to boast some of the lowest gasoline prices in the country this week with a station in North Augusta posting what might be the lowest price anywhere of $2.48 per gallon, according to GasBuddy.
GasBuddy bases its figures on reports from volunteer “price spotters” reporting specific locations in the U.S. and Canada. They are not independently confirmed.
The AAA’s prices are market averages for self-serve regular grade (87 octane) gasoline. They are calculated daily from credit card purchases and compiled by the Oil Price Information Service and Wright Express.
Not every station is surveyed and not every market is included in either report. Both price surveys note that there can be wide variations within any market.
Gasoline prices throughout California are higher than the national average and usually among the highest in the nation. That is due in part to taxes and a state law mandating a special blend of fuel to reduce polluting emissions.