Why do gasoline prices remain high even when oil prices drop? Well according to economists, one of the big reasons is Washington’s ethanol policy – a policy which requires a 10% ethanol blend in all gasoline, and mandates exactly how much ethanol the oil industry is forced to buy each year. According to the Wall Street Journal, the demand for gasoline has actually dropped from when the law was first written, principally because of the recession. But unfortunately the mandate still requires companies to purchase ever more ethanol anyway – which may please ethanol producers, but hits motorists in the pocket at the pump. Maybe it’s time to give this ethanol policy a Congressional tune up.
April 19, 2013 by Craig Rucker,
Craig Rucker is the executive director and co-founder of CFACT.