By KEVIN WALKER
Michigan Correspondent

ANN ARBOR, Mich. — Gas prices are soaring to near-record levels nationally, while prices are even higher in Michigan.

Last week, AAA reported that gas prices in Ann Arbor were an average of $3.51 per gallon for regular unleaded, while gas prices nationwide averaged $3.22. Diesel fuel is priced at $2.91 per gallon nationwide.

Yet according to an analysis commissioned by the alternative fuels industry, the price of gas would be even higher without ethanol added into the mix.

“Without the vibrant and growing domestic ethanol industry, consumers would be forced to pay as much as 14.6 percent more for gasoline at the pump this summer,” wrote John Urbanchuk, director of LECG, an expert services company.

The analysis, Ethanol and Gasoline Prices, was done for the Renewable Fuels Assoc. (RFA) in 2004.

At today’s much higher gas prices, a short term spike of 14.6 percent would mean consumers would pay 43.8 cents a gallon more for gas for a period lasting several months. Over a longer period of time, the price difference would fall to 3.7 percent, or 11 cents a gallon, as consumers and producers found ways to adjust to the higher prices, by Urbanchuk’s analysis.

According to him, “If ethanol were not available, America would need an additional 3.3 billion gallons of gasoline to meet demand at current prices. This amounts to about 217,000 barrels of gasoline production per day.

“Additionally, without ethanol, refiners would be forced to find alternative blending components that add 113-octane and enables them to continue to meet environmental standards.

“Gasoline is refined from crude oil. Blending ethanol with gasoline literally makes the same amount of gasoline go farther.”

There are 43 E85 pumps in Michigan, according to Jody Pollock, executive director of the Michigan Corn Growers Association. E85 consists of 85 percent ethanol and 15 percent gasoline.

Last week, E85 was being sold for $3.28 at a Meijer gas station in Ann Arbor. At that price, E85 is still not a good buy gallon for gallon, since vehicles using it get fewer miles per gallon.

E85 needs to be 30 cents less than gasoline in order to get the same miles on the road, said Sean Reed, executive director of the Clean Energy Coalition.

According to Pollock, E85 pricing is more related to the price of gasoline than corn, because petroleum companies control the distribution for E85.

This farm news was published in the June 2, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.