Most Americans don’t realize that, when they gas up their car, up to 10% of what goes into the tank is ethanol distilled from corn. Congress required refiners to blend ethanol into gasoline in laws passed in 2005 and 2007, which were intended to spur the production of renewable fuels and reduce U.S. dependence on foreign oil.
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The whole matter affects drivers because the ethanol mandate has been raising costs for gasoline refiners, which pass increases on to consumers whenever they can. Refiners that don’t meet the ethanol targets can still comply with the law by purchasing credits from other companies that earn them from the government by producing or selling ethanol. That’s normally a routine business decision. But the price of those credits, which are traded like stocks or commodities, has soared this year, and while they fell back after the EPA lowered the 2013 target, they’re still about 10 times higher than they were at the start of the year.
