Gas prices have risen steadily in the last month and Nebraskans are rightfully concerned and asking why.
First, the rapid rise isn't a result of domestic oil production. We're producing more oil in the U.S. now than we have since 2003. As a matter of fact, under the previous Administration domestic production of crude declined every year, whereas since 2009 domestic production has increased every year.
Second, this has nothing to do with the Keystone Pipeline. The price of oil is set on the World Market and is impacted by a host of factors -- including unrest in oil producing nations. It isn't a simple supply and demand pricing issue. Actually, the U.S. has demonstrated the lowest demand for gasoline in 15 years but the price of crude oil has still gone up.
The cause is more likely a combination of factors, including volatility in oil producing nations and lower refining capacity in the United States -- some U.S. refiners in the northeast closed their doors late last year because their plants aren't equipped to deal with the type of crude oil that is most abundant now.
This, combined with low demand for gas, resulted in operating at a loss, so refiners shut down and that resulted in about 4% of our capacity going away.
The Energy Information Administration projects slightly higher average prices for the Midwest -- about $3.50/gallon -- for 2012 and then steady at $3.50 in 2013.
The high price of gasoline is another reason why the U.S. needs to continue working to build the renewable fuel industry.
Ethanol has helped hold keep the price of gasoline from going even higher, and will continue to play a major role in our efforts to become energy independent, while reducing greenhouse emissions and creating jobs.
The Renewable Fuels Association reports that in 2010 ethanol sales in the U.S. totaled 13.23 billion gallons. Nebraska, the second leading ethanol producer in the country, produced 1.9 billion gallons from the state's twenty-five ethanol plants, according to the Nebraska Ethanol Board.
Of that, 4 percent goes into Nebraska fuel tanks and, because of lower costs at the pump, saves motorists some $55 million dollars annually.
The 13 billion gallons of ethanol the U.S. used meant that we imported 445 million fewer barrels of oil. That's more oil than America imports every year from Saudi Arabia, our third leading supplier. By importing less oil we saved $34 billion.
Ethanol production is expected to continue to increase to 36 billion gallons by 2022 as provided for in the renewable fuels standard passed by Congress.
While the prospect of continued high gas prices is not pleasant news, it emphasizes the need to continue the production of ethanol and increase efforts toward other bio fuels and renewable fuels, including wind energy. That's the good news, especially for Nebraska, which continues to be a leader in renewable fuels.