Midwest Floods May Seep Into Gas Prices

Decimated corn crop will likely boost refiners' ethanol costs
By Jim O'Neill,  Newser User
Posted Jun 18, 2008 11:29 AM CDT
Ed "Sonny" Hartl walks through his field full of corn plants ruined by recent floods Monday.   (AP Photo/Jeff Roberson)
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(Newser) – Gas prices could be going up even more as Midwest floods put acres of corn underwater, causing its price—and that of ethanol—to spike, the Wall Street Journal reports. Relatively low ethanol prices have helped keep gasoline in check, but ethanol refiners paying more for corn could be forced to pass the added costs along to consumers.

"Refiners might have a very hard time sourcing the ethanol because ethanol suppliers might not be able to get the corn," said one analyst, with 10% of Iowa's corn crop estimated lost. But with Americans already tightening belts, the analyst added, "this is happening in a bear market for gasoline. That will mute to some extent the impact of the ethanol problems."