Ethanol and Gas Prices

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Ethanol Mandate and Gas Prices | Conversations with T. Boone Pickens

Brian Bradshaw:

Hi. I'm Brian Bradshaw. I'm here with Boone Pickens. Part of ongoing series where we talk about current issues in the energy markets. Boone, thank you for being with us.

What's happened within the ethanol laws in this country?

T Boone Pickens:

A law passed and it was poorly written. Never did we imagine at the time the ethanol law came into being that we were gonna have our oil and gas industry develop all of the oil and gas that they have in the United States. It's that simple.

If you're gonna use ethanol, it should never gone above 10%. But you had gasoline demand go down and you’re continuing to raise the overall blend of ethanol into the gasoline fuel.

But this law came into being because of the EPA. Once again, you don't have an overall somebody that's responsible for energy policy in the United States. One agency after another put things in and consequently, it doesn't work.

Brian Bradshaw:

Yeah, that's a great example because you've got on one hand this ethanol law where you're requiring an amount of an ethanol be blended in. On the other hand you got cafe standards which have actually been effective at reducing our overall gasoline demand. Well those two things, when they happen at the same time, lead you to real world impact to consumers at home if this doesn't get fixed.

T Boone Pickens:

If it ain't fixed, you're gonna see 50 cents a gallon increase in the price of gasoline.

Brian Bradshaw:

So this is a great example like you said of piecemeal legislation, of different parts of government handling different pieces of the energy legislation.

T Boone Pickens:

Yeah, if you want a real quick fix, it would be if the government said, "Okay, take out the gasoline. Take out the ethanol and switch everything over to natural gas." It would be 30% cleaner and it would be half the price. Would that be a good fix? It would be that day.

Brian Bradshaw:

Well, so the ethanol law, the ethanol RIN credits, it's a law that has to get fixed. There is proposed legislation out there to fix it, but it's only a one year patch. I mean you need to permanently fix this law. And there's ways to do that and, and it should be easy to do, but I guess in Washington nothing is ever easy.

T Boone Pickens:

Nothing is ever easy in Washington.

Brian Bradshaw:

Well, thank you very much for your time. We appreciate it.

Thank you for listening.

As always, feel free to post your questions and comments below.

Thank you.