Midwest drought helps push gasoline prices higher

NEW YORK Sun Aug 12, 2012 3:29pm EDT

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NEW YORK (Reuters) - Gasoline prices in the United States rose over the past two weeks, driven partly by supply disruptions and a drought-induced rise in ethanol prices, a widely followed survey showed on Sunday.

The Lundberg Survey said the national average price of self-serve, regular gas was $3.69 on August 10, up from $3.51 on July 27.

Gasoline prices peaked this year at $3.967 a gallon on April 6. The record high is $4.112 set on July 11, 2008.

Trilby Lundberg, who conducts the survey of some 2,500 gas stations nationwide, said the rise was partly the result of temporary supply disruptions at refineries and an increase in the cost of corn-based ethanol caused by a severe Midwestern drought.

U.S. law requires a certain amount of ethanol to be sold, and much of it gets blended into gasoline, Lundberg said.

"Right now, its impact on gasoline is that it's adding to the cost," she said. "It pales in comparison to the impact of crude on gasoline, but it's among the non-crude items that has pushed up the price lately."

U.S. benchmark West Texas crude ended the week higher on Friday, settling at $92.87 a barrel. That price had been as high as $110.55 as recently as March 1.

It is up about 5.5 percent so far in August, after rising 3.6 percent in July.

Benchmark December corn futures at the Chicago Board of Trade are up 60 percent since mid-June.

(Reporting By Steven C. Johnson; Editing by Maureen Bavdek)

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Comments (4)
victor672 wrote:
Obama is pushing the prices higher because he refuses to cut the mandatory amount of ethanol in gasoline, even temporarily. What little corn there is he’d rather burn in SUV’s than use it for food.

Aug 12, 2012 8:46pm EDT  --  Report as abuse
Gedge wrote:
Sorry Vic – Obstructionist Republican Congress doesn’t want
the ethanol change. Anything to make Obama look bad before the
election. In the meantime – we all suffer because Bohner and
his cronies went on vacation before addressing the issue.

Aug 12, 2012 9:23pm EDT  --  Report as abuse
pappawtom wrote:
So the 60 per cent increase in the cost of ethanol which is usually on 10% of gasoline mixture increased the price of fuel that much? The numbers are not adding up to me. With the price of ethanol up by nearly a third means that gasoline should have increased only about 9 cents. The other 9 cents is due to refinery problems. With only that much of an increase in the cost of fuel there can not be that much problem with the supply. If it were truly a supply problem it would take a serious increase in cost. The problem is that those who control the price of oil/fuel are concerned about ways to make more money by grasping at any straw that blows their way. The consumer is not totally stupid as you would have us to believe you think we are. There is a time coming soon that it all going to blow up in everybody’s face then those who worked so hard to take as much money from those of us who can least afford it will be in exactly the same boat as the rest of us and they won’t have a life jacket to wear.

Aug 12, 2012 11:26pm EDT  --  Report as abuse
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