Gas Prices Could Dip Below $3 by Year-End
By Jeff Macke
According to David Lutz of Stifel, Nicolaus & Company, consumers are going to get a big boost to their wallets before the end of the year — and the source could surprise you. According to Lutz, the Environmental Protection Agency (EPA) is about to make some long-overdue adjustments to the federal ethanol mandate that’s been acting as a stealth tax on American drivers for years. The result could push the national average price for a gallon of gas lower than anything we’ve seen since the depths of the Great Recession.
First, a word on how we got here. As Lutz explained last summer, the 2005 Clean Air Act mandated that refiners blend ever rising amounts of ethanol into gasoline. As long as U.S. gas consumption was rising, meeting the ethanol blend requirement was arguably misguided but no more so than other economic policies with unintended consequences.
What neither the EPA nor anyone else saw coming was the drop in demand for gas. Were the U.S. Energy Information Administration’s website not down as part of the government shutdown, this link would show that gas demand hasn’t been this low in over a decade.
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