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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
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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."

Ed Sonny Hartl walks through his field full of corn plants ruined by recent floods Monday.
Ed "Sonny" Hartl walks through his field full of corn plants ruined by recent floods Monday.   (AP Photo/Jeff Roberson)
Irrigation equipment sits in a flooded Iowa cornfield in Oakville, Iowa. Corn prices have shot up 13 percent in the last week.
Irrigation equipment sits in a flooded Iowa cornfield in Oakville, Iowa. Corn prices have shot up 13 percent in the last week.   (AP Photo/Sue Ogrocki)
Corn grows in a soggy field near Victor, Iowa, Friday, June 13, 2008. Floods that have inundated the Midwest could reduce world corn supplies.
Corn grows in a soggy field near Victor, Iowa, Friday, June 13, 2008. Floods that have inundated the Midwest could reduce world corn supplies.   (AP Photo/Sue Ogrocki)
A flooded cornfield is seen in Oakville, Iowa, Monday. Corn prices have shot up 13 percent in the last week as floodwaters continue to ravage the Midwest.
A flooded cornfield is seen in Oakville, Iowa, Monday. Corn prices have shot up 13 percent in the last week as floodwaters continue to ravage the Midwest.   (AP Photo/Sue Ogrocki)
Floods that have inundated the Midwest could reduce world corn supplies and drive food prices higher.
Floods that have inundated the Midwest could reduce world corn supplies and drive food prices higher.   (AP Photo/Sue Ogrocki)
Gasoline is delivered from a tanker truck to an Exxon station in Little Rock, Ark.
Gasoline is delivered from a tanker truck to an Exxon station in Little Rock, Ark.   (AP Photo/Danny Johnston)
A motorist gasses up at a Chevron station in Portland, Ore., Friday.
A motorist gasses up at a Chevron station in Portland, Ore., Friday.   (AP Photo/Don Ryan)
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Rising corn prices slow ethanol industry
BusinessWeek

Sugar stocks up as corn-based ethanol harried by floods
Economic Times (India)

 
Iowa • ethanol • corn • gas prices • Midwest floods

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