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Higher Gas Prices: Ethanol Subsidy Expiration Could be to Blame

The expiration of ethanol subsidies from the federal government last month may already be driving up gas prices at the pump, according to AutoblogGreen.

Earlier this week, Bloomberg reported an increase of 12 cents to $3.36 a gallon to filling station prices – the first three-week increase in gas prices since October.

Autoblog says that the rise could perhaps be blamed on Congress. The legislature failed last year to add an extension to subsidies of corn-based ethanol that had been in place for 30 years, allowing the $0.45 per gallon of production payout to expire on December 31, the web site reports.

Most gasoline sold in the U.S. contains at least 10 percent ethanol so the subsidy’s expiration may have triggered a 4.5 cents per gallon increase in fuel costs to gasoline suppliers. That charge that now looks to be getting passed on to consumers, the blog suggests.

The subsidy, which was the subject of legal wrangling for much of last year, paid out around $6 billion in 2011.

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11 thoughts on “Higher Gas Prices: Ethanol Subsidy Expiration Could be to Blame

  1. The Corn Based Ethanol actually creates greater fuel consumption in all automobiles, so get rid of it….Of course, that’s what people have been saying for the past 30sum years.

  2. The addition of Ethanol to Gasoline is A RIP OFF. Ethanol is 20% less efficient than gasoline resulting in a 2% reduction in fuel efficiency for gas with 10% ETOH. The ETOH ruins small gas engines and boat motors. Because a large % of corn production goes to Ethanol production, corn and soy bean costs are at historic highs. Subsidized Ethanol reduces fuel efficiency; increases food costs and is just plane BAD for those of us who do not grow corn.

  3. removing the subsidies just means that instead of every taxpayer footing the bill for ethanol only fuel buyers have to pay to support this junk. What needs to end is the renewable fuels mandate.

  4. …as long as our administration has binding ties with Monsanto (ADM, Cargill, etc) via Vilsak, Hillary and others, we will never be rid of corn subsidation. While the head of the FDA is a gmo proponent, all consideration of nixing or lessening these subsidies is just lip service.

  5. http://www.freerepublic.com/focus/f-news/1704554/posts http://

    (NO on Prop. 87, 2006 An ethanol support)
    Clean Air Performance Professionals
    Charlie Peters President
    (510) 537-1796

    Federal ethanol policy increases Government motors oil use and Big oil profit.

    It is reported that today California is using Brazil sugar cane ethanol at $0.16 per gal increase over using GMO corn fuel ethanol. In this game the cars and trucks get to pay and Big oil profits are the result that may be ready for change.

    We do NOT support AB 523 or SB 1396 unless the ethanol mandate is changed to voluntary ethanol in our gas.

    Folks that pay more at the pump for less from Cars, trucks, food, water & air need better, it is time.

    The car tax of AB 118 Nunez is just a simple Big oil welfare program, AAA questioned the policy and some folks still agree.

    AB 523 & SB 1326 are just a short put (waiver) from better results.

    GOOGLE: Prop 87 (510) 537-1796

  6. I have had two small engine operated equipment to fail and both times it was the carburator. The tech that made the repairs said that it was caused by the ethanol in the gasoline.

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