Gas prices are way up and it's not just because of soaring oil prices on the world market that are beyond our control. Under the GOP's watch and pushed farm state legislators, Congress mandated more ethanol use in our gasoline. The net result, as Irwin Stelzer explains, is tighter gas supplies and even higher prices at the pump.
Finally, there is gasoline. In the good old American tradition of believing there is a solution to every problem, voters want to know what Congress is planning to do about gasoline prices, which are once again on the rise. Perhaps holding off until Congress was safely out of shouting range, the Department of Energy announced a precipitous drop in gasoline inventories, and released its forecast of gasoline prices. It expects the average price of regular grade gasoline to hit $2.73 next month, $0.57 and 26 percent higher than in May of last year. Part of this is due to the mandated increase in the use of ethanol, which is rising in price as producers find themselves hard-pressed to meet skyrocketing demand--up from 1.8 million barrels a month in 2002 to 7.4 million barrels this month. This is a perfect example of the law of unintended consequences--not unforeseen by experts, but neither foreseen nor intended by legislators. In order to blend ethanol into gasoline and still avoid violating air quality regulations, refiners must remove other components, with the net effect of reducing gasoline supplies by 1.7 percent in the face of increasing demand.
Good job, Republicans. ADM may be happy but I doubt most voters are -- for now at least.