Harkin, Bayh Urge Ethanol Relief for High Gas Prices

Senators call on department of energy to investigate oil companies' avoidance of low-cost ethanol. Compiled by staff

Published on: May 12, 2005

In a letter to Energy Secretary Samuel Bodman Thursday, Senators Tom Harkin, D-Iowa, and Evan Bayh, D-Ind., requested the Department of Energy investigate the continued refusal by oil companies to blend low-priced, domestically produced ethanol into the nation's gasoline supplies.

The letter comes on the heels of a Consumer Federation report which concluded that gasoline prices could be significantly reduced if more ethanol were used in the nation's fuel supply. Though gas prices are soaring, oil companies have refused to blend lower-priced ethanol into a larger share of the fuel supply.

"Skyrocketing gasoline prices continue to burden our economy and strain the family budget," Harkin says. "Blending more ethanol into our fuel supply could lower these costs immediately. Yet oil companies refuse to budge. Americans deserves to know why oil companies making record profits insist that families pay top dollar at the pump when prices could be reduced by blending more lower-priced ethanol into our fuel supply. I intend to find out."

"American families are literally paying the price for our dependence on places like Saudi Arabia, Venezuela and Russia every time they fill up at the pump," Bayh says. "There is no reason they should be in this situation, when relief for high gas prices can be found in our own country. We need to make the most of this opportunity by substituting ethanol for oil to cut the cost at the pump."

Domestic production of ethanol is expected to reach four billion gallons this year. And as oil prices have soared, ethanol prices remain comparatively low. By substituting some ethanol for gasoline derived from oil in our national fuel supply, gasoline prices could be reduced, saving families at the pump.

In fact, a Consumer Federation study released last week found that U.S. consumers could be paying as much as 8 cents a gallon less for gasoline if oil companies used lower-priced ethanol rather than higher priced petroleum components. At this rate, blending more ethanol into gasoline could save a typical family more than $85 at the pump each year.

Yet oil companies are deliberately keeping oil supplies tight and prices high, even though domestically-produced ethanol supplies are plentiful and have dropped as much as 50 cents per gallon since the beginning of the year. Oil companies, petroleum refiners and distributors continue to refuse to blend more into the fuel supply, preferring to use more oil-derived products instead.

"Oil companies are posting record profits while saying they can't use ethanol," says Harkin. "That's passing the buck, quite literally, to America's families and businesses that need reasonably priced gasoline. I urge the administration to investigate why more home-grown ethanol is not blended into gasoline even though it costs less."

Currently, in the United States about 97% of our transportation fuel comes from oil, with nearly two thirds of it imported from foreign sources. Harkin recently introduced legislation in the Senate co-sponsored by Bayh to establish a Renewable Fuels Standard (RFS) that would require oil refiners to blend at least 8 billion gallons of biodiesel and ethanol into motor vehicle fuels a year by 2012 – more than doubling current levels. This is the most ambitious proposal currently in Congress.

"With gas prices easily topping two dollars a gallon, we need to begin looking into this problem immediately. We should insist that oil companies make full use of the ethanol blend to provide some measure of relief to families already paying unexpectedly high prices at the pump," added Bayh. "If the Administration is serious about reducing the cost of gasoline, this investigation is the way to do it."