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Biofuels Bump Pump Prices

Posted May 24, 07 11:51 AM CDT in US,  Business 

(Newser) – 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?

Source New York Times

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Gas prices in the northwest section of the District of Columbia are displayed at this Exxon service station Wednesday, May 23, 2007, in Washington. (AP Photo/Haraz N. Ghanbari)   (Associated Press)
A handful of corn is shown before it is processed at the Tall Corn Ethanol plant, May 24, 2006, in a Coon Rapids, Iowa file photo. Increased production of biofuels such as ethanol may help farmers' bottom...   (Associated Press)
California Gas Prices Start To Rise Above Three Dollars   (Getty Images)
TO GO WITH AFP STORY-US-ENERGY-FARM-CORN   (Getty Images)
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