Gas Prices Up But Could Be Higher

Thursday, 03 July 2014 00:00

Today's Star Tribune ran a story that's been the topic of the month : high gas prices. As the fourth of July weekend approaches, motorists looking to travel up north for the holiday weekend are feeling it in their wallets as pump prices reach the highest point they've been since 2008.

As we've written on countless occasions, the recent spike in gas prices is a direct result of the ongoing conflict in Iraq, although just about any global uncertainty (re: Ukraine), sends traders into a panic and the price of crude oil goes up. Consumers, in turn, feel the pinch (no prizes for guessing who profits from this).

But, as we've said before, it could be worse. Thanks to ethanol, consumers aren't paying as high as they could. Based on today's RBOB and ethanol prices, consumers are saving at least 16 cents a gallon at the pump, which is pretty significant this weekend if you're travelling up north to the lakes.

And that's just because the gas we buy contains 10 percent ethanol. Imagine if it was 15 percent ethanol (E15), which eight out of 10 cars on the road can use. The savings could be at least 26 cents a gallon! Pumping more shale oil in North Dakota isn't going to reduce gas prices as we've already noted in this blog for many reasons. The ONLY thing reducing gas prices is ethanol.