The Gas Price Blame Game

Record gas prices have prompted heated debate about the root causes, leading some to point their fingers at ethanol, which in the U.S. is usually made from corn (see "Grass to Gas," Currents, May/June 2005). Congress had recently mandated replacement of the groundwater pollutant methyl tertiary butyl ether (MTBE) with ethanol, another additive that decreases pollution when blended with gasoline.

Although ethanol is a convenient scapegoat, petroleum industry consultant Tim Hamilton says he researched prices in states where gas contains ethanol and states where it does not, and found increases almost mirrored each other. The real reasons for high gas prices are high crude prices and the fact that oil companies have not increased their refining capacity, says Hamilton. "In the long run, ethanol will create competition among companies and will help the environment," he says.