One irony of the current gas panic is that big oil companies are being pilloried for their profits, but domestic ethanol producers get a pass. Yet the ethanol makers receive more government subsidies and are responsible for far more of the current gasoline price spike. Congress doesn’t have to bash ethanol makers; all it has to do is allow more foreign supply, which will do more to reduce gasoline prices more quickly than any other single idea.
As you probably know, oil companies were using MTBE for reformulated gasoline that reduced smog and complied with EPA regulations. It was discovered that MTBE from underground gasoline storage tanks was showing up in groundwater, and MTBE was pulled. Ethanol is now being used as a reformulant to comply with emissions rules, but domestic ethanol producers are having a hard time keeping up with demand during the transition, and that’s apparently one reason for higher gas prices.