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Ethanol driving recent gas price increases

April 10, 2014

While lifting the cap on Pennsylvania’s Oil Company Franchise Tax may have caused a modest increase in gas prices, recent news reports say that the larger culprit is the increasing price of ethanol.

Most gasoline sold in the U.S. is made up of approximately 10 percent ethanol, according to MarketWatch.  A volatile ethanol market is to blame for driving up gasoline prices since early February of this year.

Ethanol prices rose by 22 percent in March alone, and the price of ethanol to date has risen 30 percent, to $2.30 per gallon. The corn-based fuel has been a popular blending option in recent years, as it is cheaper than gasoline. The shortage of ethanol is due mostly to this winter’s harsh weather, which caused transportation disruptions.

Central Pennsylvania’s gas prices are currently in line with the national average. Additionally, gas prices for the region are about the same as they were a year ago and 40 cents per gallon less than they were two years ago.

“While you can certainly argue that gas prices are a few cents higher than they would be had the gas tax cap not been lifted, there are many other factors affecting the price people pay at the pump,” said PHIA Managing Director Jason Wagner. “The transportation funding act will only cost a typical motorist about $2.50 a week at the end of five years, which is a small price to pay for safer and less congested roadways.”

To read the entire MarketWatch article, click here.

 

 

 

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