Gas Price Relief -- Now


Ronald H. Miller, 2012
Prisma Advisors, LLC., www.prisma-advisors-llc.com



With gasoline prices soaring to $4 and $5 per gallon, it is good to know that relief is available now, but only if the President will act.  His "all of the above" strategy has merit.  New oil and gas production is not the answer, but it is part of the solution.  The Keystone Pipeline is not the answer, but it is part of the solution.  Wind and solar the same.  And biofuels - to date ethanol has made the only significant renewable contribution to energy security and a better economy.  We now enjoy nearly a million barrels a day of clean, renewable ethanol production at the expense of those who hate America..  What's more, the U.S. Navy is not required to escort this sustainable energy source to our gasoline stations.

Today ethanol costs $0.90 per gallon less than gasoline and it's not taxpayer subsidized like oil and gas.  That means an E10 blend is $0.09 per gallon cheaper than straight gasoline, and it has a higher octane performance rating.  We have a growing surplus of ethanol in this country because of the artificial 10% blend limitation.  ADM, the nation's largest ethanol producer, just announced the closure of its North Dakota facility, a victim of swelling supplies.  Unfortunately that sends the wrong signal of more energy dependence to say nothing of the devastating effect on the local rural economy.

Languishing at USEPA is a request to allow 15% blends of ethanol in the market place.  Immediate implementation would reduce gasoline costs by nearly a nickel a gallon.  Every little bit helps!  EPA has approved E15 for 2001 and newer vehicles and recent health effects testing showed ethanol as a big winner.  However this bifurcation of the market is a barrier to gasoline stations moving toward the higher blends.  They must have products that everyone can use.  EPA hasn't disapproved E15 use in older cars - they just have yet to complete their testing protocols.  Other independent testing has concluded older vehicles run fine on 15% ethanol.  Mr. President, it is time to move the bureaucracy forward and bring E15 to market now in order to save cash strapped consumers money and further blunt the influence of those who would harm us.

In the next decade we will likely move to 25% ethanol blends just as Brazil has been doing for the last 40 years.  There are many new exciting, sustainable feedstocks including cellulose, drought-resistant energy crops grown on marginal land and trash which can be diverted from landfills into useful energy products.  These technologies are on the cusp and need a ready market.  Consumers need relief now.  E15 approval is a win-win.  "All of the above" will be judged this election season by acts and not just words.  The time to act is now!

Ronald H. Miller is Managing Director and co-founder of Prisma Advisors, LLC a management advisory firm specializing in advanced biofuels.  Mr. Miller has over four decades of energy experience, including CEO of a Fortune 1000 producer of biofuels and food products from agriculture.

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