I’ve received several inquiries about a bill I’m sponsoring that pertains to Minnesota moving to a 20 percent blend of ethanol and gasoline. Although that remains a goal for our state, we can’t increase our ethanol blend without the approval of the federal Environmental Protection Agency. Currently, most gasoline sold in Minnesota contains a 10 percent blend of the renewable fuel. The bill I’m carrying simply says that our state will blend the maximum amount allowed by federal law, up to 20 percent.
Some may wonder about our ethanol mandate and whether it makes our gasoline more expensive. To my way of thinking, just the opposite is true. To prove my point, we can take a look at the prices for both ethanol and unleaded gasoline on the futures market at the Chicago Board of Trade. Over the past four months, the price of ethanol has actually decreased by 42 cents and has fallen to $2.25 per gallon. In that same time span, the price of gasoline has gone up by 60 cents to a high of $3.31 per gallon. What that means is blending ethanol with gasoline should actually lower the final price of the product! Proof of that comes from neighboring South Dakota, where gas is sold as regular unleaded or with a 10 percent blend. The ethanol-blend usually sells for about ten cents per gallon less than straight gasoline.
Gas prices currently are at all-time highs for this time of year. They traditionally increase during the springtime season as refineries make the switch from winter to summer-blends, and as consumers begin driving more. Some analysts predict $4 per gallon prices by Memorial Day as vacation driving gets into full swing.
Nationally, our ethanol plants were planning to produce about 13 billion gallons this year. Currently, that’s more than is being consumed. Inventory levels are at record highs even though production is 2 percent below a year ago. Demand is down for ethanol as well as gasoline. A recent report I read said that gasoline demand in this country has declined for 47 consecutive weeks.
None of us likes to pay these high prices for gas. But it’s my opinion that, were it not for ethanol, prices would be even higher. A recent study published at Iowa State University showed that, nationally, ethanol has reduced the average price consumers pay for gasoline by up to 89 cents per gallon.
A tax bill passed in the House last week would give owners of commercial and industrial property in Minnesota a break on the taxes they pay directly to the state. The measure, sponsored by Tax Committee Chair Greg Davids, (R-Preston), would reduce by 70 percent commercial properties’ first $150,000 in taxable value. This reduction would apply only to the statewide commercial/industrial tax paid to the state. To partially finance this tax reduction, the renters’ credit would be reduced from 17 percent to 15 percent.
Rep. Anderson can be contacted by email at rep.paul.anderson@house.mn or by phone at 651-296-4317. To receive email updates sign-up on his webpage at www.house.mn/13a
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