Gas Prices Revisited

[hycamguy07]

unleaded gasoline costs $2.95 per gallon to $2.85 per gallon.

The average gasoline price in Houston was $2.918 on Friday, according to AAA Texas, second only in Texas to Galveston-Texas City at $2.933 per gallon.

Though ultimately gasoline prices react to oil prices, for now there are also concerns about the cost of the ethanol coming from the Midwest.

The Houston area and the Dallas-Fort Worth area share the distinction of having the most expensive gasoline in Texas. In both places service stations are required to sell a gasoline blend with 10 percent ethanol that is designed to reduce emissions in these cities with air pollution problems.

Because of the high level of air pollution in this area and the Dallas-Fort Worth area, gas stations in eight counties throughout the Greater Houston area and four in North Texas use a formula of gasoline mixed with 10 percent ethanol. This has pushed up prices because ethanol is now far more expensive than the additive it replaced: MTBE, or methyl tertiary butyl ether, which has been linked to water pollution.

The gasoline sold in Beaumont or Corpus Christi doesn't need to be blended.

Brad Proctor, an analyst with GasPriceWatch.com, said the higher prices reflect the switch by oil refiners to gasoline blends with ethanol in major markets with pollution problems.

As a result of a nationwide changeover to ethanol from MTBE, many of the bio fuel suppliers in the corn belt states have struggled to accommodate increasing demands for ethanol.

"It's now in great demand so the farmers' prices are going up. It's like anything, when demand goes up, the price of a commodity goes up," Proctor said.


More facilities being built
Eventually, ethanol prices are expected to ease, analysts said. There were 101 ethanol processing plants online this week, and 40 more are under construction nationwide, White said.

White pointed out that gas prices dropped in California in 2005 after legal mandates required all stations in that state start using gasoline blended with ethanol. Two studies showed prices dropped statewide about 8 cents per gallon, White said.

Kloza said eventually ethanol prices will subside, but relief will be slow in coming.

"Somewhere down the line, maybe next year or the year after, there's going to be a lot of production that's coming on," Kloza said. "It's been green-lighted, there's not a lot of permitting holdups and problems with getting production cleared, and ultimately I think that's going to mitigate summer prices — but not this summer."

In the meantime, some consumers such as Phuc Nguyen, a physician from Clear Lake, are trying to limit their driving.

"Now, a lot of people I know just go home after work instead of going out to eat or to get a drink," said Nguyen, who was filling up his car Friday afternoon at the Shell station on Fannin and Old Spanish Trail, which was selling regular unleaded for $2.89 per gallon. "A lot of them just limit going out to maybe one night a week."

http://www.chron.com/disp/story.mpl/headli...iz/3955895.html

I thought this was worth passing on, as Ethanol seems to be the answer at this time..
Im wondering if the gas prices will continue to rise else where in the USA. On my trip to Texas Im surprised to see as many large pick up trucks, seems everyother vehicle is a truck or SUV out here!


Whats your take on the Ethanol issue?

[john1701a]

<div class='quotetop'>QUOTE(priusguy04 @ Jun 10 2006, 10:30 AM) [snapback]269174[/snapback]</div>

Ethanol futures for July were selling at $3.725 per gallon on Friday afternoon, compared with MTBE, which sold at about $1.99 per gallon at the end of May, the last time Tom Kloza, an analyst with the Oil Price Information Service, followed sales of the chemical. In early May, ethanol futures stood at less than $2.70 per gallon.
[/b]

In other words, gas prices were artificially being held low by the use of the water-pollution-causing blend with MTBE. Interesting. It only makes sense that a cleaner solution costs a little bit more.

For those that don't live in corn country, that translates to 7 more cents per gallon... a rather trivial when the price of gas is at $3 per gallon and fluctuations from day to day are commonly twice that anyway.

For those that do live there (like me), we've been using the 10 percent ethanol blend for over a decade now; its production & use has become an integral part of the state economy. The recent push of flex-fuel vehicles has made the approval for building larger production facilities easier now. That should translate to reduced cost, which could eliminate the price difference entirely... making this point-of-concern a complete non-issue. Cool! But in the short-term, the introduction elsewhere will have to endure the initial higher cost. Oh well. It's the long-term that matters most. Of course, even at that level it only increases the price by another 10 cents per gallon... a small amount considering the fact that gas was over $1 less per gallon just a year ago.

[s.e.tx_parrothead]

Just to give you an idea of prices in the Greater Houston area........We live an hour north of Houston, just outside the 8 county area (by one county)..Gas here yesterday was 2.69, as we drove south on US 59, gas in Cleveland, TX (29 miles south) was 2.83. When we got to the Conroe/The Woodlands/Spring are it was closer to 3 bucks. The funny thing is that I work in Huntsville, about an hour west, and gas is usually 5-9 cents cheaper there. My hubby works in Diboll, about an hour north, and the prices there are usually 5-9 cents higher than in Livingston. Go figure.....We were on our way back from the Woodlands yesterday and followed(tried to follow) a Prius from I45 to US59.....I really want my Prius soon!!!

[kdmorse]

The gasoline sold in Beaumont or Corpus Christi doesn't need to be blended.

Wait a sec - I thought it was federally mandated that all gas would be E10 by the end of the year? Or was this only mandated for gas using MTBE?

If some areas are E10, and some are not, is there anywhere you can go to determine what areas (states, cities, counties, etc..) use E10, and which are not?

-Ken

[s.e.tx_parrothead]

From what I understand that there are several areas in Texas that have to have stricter guidelines due to pollution problems...the easiest way to see this is that the speed limit on major roads drops from 70 to 65 and sometimes on rural roads down to 55 where it had previously been 70. These areas also require emissions testing as well as different fuel blends. The county that I live in does not require the emissions testings as we are just outside the 8 county area. When the emissions testing went into effect, many people from the affected area attempted to get their vehicle inspections here and therefore, we now have to show a driver's license or other proof of residency before they will do your inspetions.

I believe that Austin and San Antonio may also be required to do this as well as the Greater Houston area and the DFW metroplex...I travel to Beaumont frequently as I supervise parole officers at the prisons there and the gas prices are cheaper than Houston and the speed limits do not drop to 65 except for the US69/I10 interchange area. I could be wrong about all of this as well...I believe that the Beaumont area needs these restrictions as well...That place gives me a headache everytime I go down there