As the summer driving season shifts into high gear, consumers are well aware of gasoline prices and the impact the price will have on their summer travels. Although gasoline makes up 90% of the gallons we purchase for our vehicles, the product that makes up the additional 10% (Ethanol) can have a big impact on the price we pay.
Ethanol is a fuel generated from the distillation process of plant materials like corn and sugar. It is biodegradable, nontoxic and dissolves in water. The majority of the ethanol sold in the United States is produced from corn. The U.S. is the largest producer of corn in the world and the 10% requirement in gasoline provides a steady year after year demand for the crop. The price of corn and its availability can have a significant impact on the price of a gallon of gasoline. The price for ethanol has been unstable in 2019 and weather has had the biggest impact on corn pricing.
The mid-west states dominate corn growth with the perfect climate to produce corn. Until recently, the mid-west is looking more like a marsh rather than the fertile field of the nation’s lucrative crop. Hurricanes, heavy rain, and flooding have made an impact on mid-west crop production. Much of the rain falling in the mid-west states has originated in the Gulf of Mexico. Flooding in the mid-west has affected seeding and the outcome of the harvest. Corn needs to be planted when the soil is firm and dry. Poor weather conditions and a poor harvest will affect the price of corn and ultimately the price of the ethanol by product added to our gasoline. Only time will tell how much of an impact the reduction in the mid-west corn harvest will have on the price we pay at the pump.