High Gas Price Solution? It’s Simple …

For ethanol and its higher-blend retailers, the best defense against misinformation is highlighting current prices at the pump, where E15 and flex fuels offer real-world proof that more ethanol equals lower costs for consumers.
By Ron Lamberty | June 07, 2022

When someone says, “It’s so simple …,” what usually follows is one of a few things: 1) a complicated explanation that’s only simple to the person and the rocket surgeons they work with, 2) proof the speaker/author doesn’t have any idea what they’re talking about, or 3) a simple but inaccurate explanation designed to mislead people and deflect blame from those who actually caused the problem.

There has been plenty of number two (pun intended) when it comes to “simple” explanations for recent gasoline price increases, but most excuse-making “experts”—who I can only hope were well paid to say the ridiculous things they've lent their names to, writing columns or doing interviews that offer simple explanations for recent gasoline price increases—fall into category number three.

I came across a new claim—and a time-honored blame-shifting classic—recently, which reminded me how far politicians and media will reach to avoid placing blame for increased gas prices where it belongs. An op-ed calling the Jones Act the “real culprit of high gas prices,” said the act made it three times as expensive to ship oil from the Gulf Coast to New England than from the Gulf Coast to Europe. I didn’t verify the claim because the author offered “real" dollar amounts of $6 and $2 a barrel, respectively. Assuming the numbers are true, the difference is a dime a gallon, not the buck and a quarter increase we have experienced. Another classic distraction is a claim that fuel taxes are to blame, but that doesn’t add up either.

The true “real culprit of high gas prices” actually is very simple. Gas prices are higher because oil companies raised them. A lot.

Big Oil issued dire warnings about supply concerns when Russia invaded Ukraine, then jacked up their prices so additional cash from our pockets could soothe those concerns. Remarkably, oil companies have somehow maintained a steady supply of $4 gas and $6 diesel. No outages. Oil defenders also say prices had to rise due to increasing costs. Fair enough, and easy to verify. If prices rose only to offset new higher costs, oil company profits would be flat, not the record profits and massive margins we’re seeing this year.

As usual, retailers are blamed and receive additional scrutiny from politicians and media without sharing in any of Big Oil’s windfall. Retail fuel margins are lower than last year, and every link of the supply chain before them is pocketing mammoth profits. Price gouging is happening nearly everywhere but where they’re looking.

Ethanol, the RFS and RIN prices also get our regular unearned share of blame from those who don’t know, or don’t care, that ethanol costs a buck a gallon less than gasoline, or those who are fully aware but know from experience they can tell reporters it’s ethanol’s fault—and those journalists won’t bother to check actual prices.

For ethanol and retailers, the best defense has been at the pump, where E15 and flex fuels offer real-world proof more ethanol equals lower prices. The more high-blend retailers we can add by explaining ethanol profit opportunities, assisting with new USDA grants, and anything else we can do to help them sell more of our fuel, the harder it will be for Big Oil and their apologists to point the finger at retailers or ethanol the next time they see an opportunity to shake down U.S. drivers.

Author: Ron Lamberty
American Coalition for Ethanol
[email protected]