As gasoline prices tumble, retailers take a pass on ethanol

Tuesday, November 25, 2008 | 6:42 p.m. CST; updated 10:14 p.m. CST, Tuesday, November 25, 2008

COLUMBIA — Depending on the retailer, Missouri drivers could be filling up their tanks with an ethanol blend well below the state-mandated 10 percent — and in some cases even pure regular unleaded.  

Falling gas prices have allowed many retailers to take advantage of a provision in Missouri's renewable fuels standard. Under the law, if wholesale ethanol blends are more expensive than regular gasoline, retailers can opt to purchase and sell pure regular unleaded gasoline rather than the 10 percent blend required by the fuels standard.  

“We're actually seeing in some market areas just straight gasoline or some very small percentage of ethanol in regular unleaded,” Ron Hayes, program director of the Missouri Department of Agriculture Weights and Measures, said Tuesday.  

A recent random sampling of one Columbia retailer by Weights and Measures found its regular unleaded consisted of just 3.3 percent ethanol, Hayes said.

“Typically, right now, ethanol is more expensive literally across the board,” said Ron Leone, executive director of Missouri Petroleum Marketers and Convenience Store Association.  “Most of my members are using unblended.”

For retailers, the decision to use blended or pure regular unleaded is made at the point of wholesale purchase because of the unpredictability of market prices.

“It is literally determined at the terminal on a tanker-by-tanker basis,” Leone said. 

Hayes noted one tanker that opted for regular unleaded over an ethanol blend fuel because of an eight-tenths-cent difference in price.  

“He ordered 2,500 gallons of regular unleaded and saved $20,” Hayes said.  

The first week of November is when Hayes first noticed that gasoline prices were lower than ethanol prices and has watched as the trend has spread.   

While ethanol producers have tried to match the diving gas prices, the volatility of the market has led to minimal success. Some days the difference can be as much as several cents in areas such as Kansas City, Springfield and Joplin, Hayes said.  

"Now that grain prices have dropped and the price of gasoline has dropped, these ethanol plants are hurting,” Hayes said.

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