Increased Use of Ethanol Urged

U.S. oil companies could lower gasoline prices by 8 cents a gallon by using more of the grain-based additive ethanol, a consumer group said Thursday.

U.S. ethanol prices have fallen 31% in the last year to a 23-month low as production has risen faster than demand, according to Energy Department figures. Refiners could reduce pump prices by substituting ethanol for costlier components derived from oil, the Washington-based Consumer Federation of America said in a report.

“Oil companies in many parts of the country can easily blend ethanol, a high-octane, domestically produced, renewable fuel, into gasoline but have chosen not to,” said Mark Cooper, the federation’s research director. “As a result, consumers are paying more than they should for their gasoline.”

David Sykuta, executive director of the Illinois Petroleum Council, said oil companies were using ethanol wherever supply, shipping and storage costs made it economical to do so. Ethanol’s chemical composition makes it unsuitable for pipeline transport, so the additive is shipped by more costly means, such as tanker trucks and rail cars, he said.