Four-dollar gas? Blame biofuels, the oil industry says. Construction of new refinery capacity is on hold thanks to government regulations that will soon require oil companies to produce biofuels such as ethanol. Uncertain standards for biofuels, which may render new refineries useless, have led oil companies to rethink expansion plans—and that's contributing to the recent spike in prices.
The State of the Union address included a call for more biofuel use, and Congress is looking to boost ethanol use nearly fivefold. But industry representatives tell the Times the government's plans may come with unexpected downsides, like the current price spike. Then there's the matter of raw materials; for instance, what happens in years with a bad corn crop?