Next time you go to the gas station, hold onto your wallet. The price is going up. The average retail price of gasoline in the United States last year at this time was $2.15 a gallon; at this writing it is $2.50 a gallon, and the Energy Department predicts it will rise at least to $2.75 a gallon this summer, with higher spot prices. New Jersey is one of those spot prices, as we approach $3 a gallon.
Why has gasoline gone up so much? It is not because of some greedy Arab sheiks, lack of OPEC production, terrorist disruptions in Iraq and Nigeria, India and China using more oil, oil companies making too much profit, hurricane in the gulf, nor Iran wanting nuclear weapons. Nope, it is Congress.
Congress required the use of 2 percent oxygenates to be added to gasoline to make it more clean-burning. In the center of the U.S., corn-based ethanol was added to gasoline, and places far from the big farms like New Jersey used MTBE (methyl tertiary butyl ether), a petroleum-based product. Unfortunately, this gasoline additive was found to contaminate groundwater. The oil refiners in their defense said the only reason they put MTBE into gasoline is because Congress required them to.
In the Energy Policy Act of 2005, Congress removed the 2 percent oxygenated requirement as of May 5, 2006, but offered no protection past or present from lawsuits because of contaminated groundwater. Therefore, the oil refiners have said they no longer will make MTBE, and will now have to blend ethanol. The corn growers can’t produce enough ethanol to replace all the MTBE, because the United States has 97 ethanol plants operating and 33 under construction. The major problem with ethanol is it can’t be transported in a pipeline, only truck or rail car. To ship from the Midwest to New Jersey will be expensive. Congress did not help New Jersey with any imports from Brazil because they put a 54-cents-a-gallon tariff on imported ethanol. With less supply, demand for gasoline rising 2 percent per year, economics dictates that the price must go up.
So when you go to the gas station and see the high prices, remember to thank your senators and congressman. Better yet, remember to send them a message when you vote in November.
Martin A. “Skip” Jessen
Edison