All interesting points, dgallup.The Congress mandated a certain figure for gallons of ethanol to be blended into gasoline each year. That is above and beyond any EPA clean air "oxygenated fuels" mandate. The mandate for oxygenates was regional; the madate for blend x billion gallons is national. Basically, nearly all gasoline, of all grades in the U.S. have ethanol. In theory, removal of the blending credit would cause a reduction in profits for the refiners/blenders. However, this possibly has been offset by the removal of the tariff on imported ethanol. So, theoretically, the blenders now have access to potentially cheaper supplies. Another way to look at things is that by blending ethanol into virtually all of the gasoline, the blenders are watering down the fuel with a cheaper product under the cover of the government blending mandate. One other item that could effect pump prices is the rise in exports of refined products. That gasoline in the past would have gone into storage and depressed prices. Another wild card is the fall of natural gas prices in the U.S. As gas is probably the most common fuel used for ethanol distillation and drying of the left over mash, this should cause a downward trend in ethanol prices. At this point I think the situation is still kind of squirrelly and needs some time before a clear trend on prices can be seen.
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