Sharp Ethanol Price Drop Adds to Transportation Woes - 9/14/06

A drastic decrease in U.S. ethanol prices has been causing problems in transporting the new additive.  The decrease is showing ethanol priced at about $2.15-$2.17 per gallon. 

Prices of ethanol rose during the summer while the oil industry replaced MTBE with ethanol as an additive to gasoline.   MTBE is banned in many states due to pollution.  Ethanol cannot be shipped through accessible gas pipelines due to the fact that it absorbs water and it condenses in the pipeline.

The problem is waiting for the ethanol exclusive transportation systems.  While waiting for a delivery if the prices fall sharply it has a dramatic effect on the retailer.  Some retailers have to pay for a storage fee due to not needing as much.  There is a lot of double and triple handling of the product. 

At one time supply had been the problem with ethanol and related products.  These problems are now gone, but the distribution and storage capacity problems could continue for the next couple of years.

Reuters
Author:  Edgar Ang
September 12, 2006

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