Having a Market Impact

Gas shortages hit the East Coast is the title of a CNN online article that just hit the wires minutes ago.  Here’s the bottom line.  ETHANOL is having an impact on the market but maybe not for the reasons you may have thought (for now).

Here’s the scoop:

The shortages are not because refiners are not making enough gasoline, or because of a recent rupture on the key Plantation Pipeline that carries supplies from the Gulf Coast to the East Coast, industry officials said.

Rather, the oil industry is rapidly eliminating a gasoline additive called MTBE, banned in several states for polluting ground water, and replacing it with ethanol, a renewable fuel that can’t be shipped by pipeline because it absorbs water.

"There’s not a shortage of supply," said John Eichberger, a spokesman for the group. "It’s a transitional issue."

Because ethanol is a solvent, it will strip corrosion and impurities that build up inside gasoline storage tanks, allowing them to mingle with gasoline supplies.

That means terminal operators must drain giant tanks that hold gasoline stocks and scrub out the impurities before they can be refilled with ethanol-enriched gasoline, he said.

"That’s going to compromise supplies for awhile," he said.

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