Nymex Gasoline Drops After Bush Suggests Reduced Ethanol Tariff
2006-05-08 15:45 (New York)
By Robert Tuttle
May 8 (Bloomberg) -- Gasoline futures fell for the first in
four days after U.S. President George W. Bush said he wants the
tariff on ethanol imported from Brazil dropped.
Eliminating the 54-cent-a-gallon tariff would boost ethanol
imports, increasing supplies, Bush said in a May 5 interview on
CNBC. Over the past several weeks, refiners have been phasing in
ethanol as the primary additive in reformulated gasoline. U.S.
ethanol production may not be sufficient to meet demand this
summer, the U.S. Energy Department has said.
Initially, the market ``will fall and then people will think
through how much supply it is going to add,'' said Andy Lipow,
president of Houston consulting company Lipow Oil Associates LLC.
Gasoline for June delivery fell 3.7 cents, or 1.8 percent,
to $2.0036 a gallon on the New York Mercantile Exchange. Earlier
in the session, prices fell to $1.965, the lowest since April 8.
Reformulated gasoline normally contains about 10 percent
ethanol. Imports currently account for as much as 10 percent of
ethanol consumed in the U.S., Lipow said. The wholesale price of
ethanol has risen 52 percent this year and was $2.7937 a gallon
on May 5, according to Bloomberg data.
Gasoline futures were also pushed lower by oil, which
accounted for 55 percent the retail price of gasoline in March,
according to the Energy Department. June oil futures in New York
fell 42 cents to $69.77 after Iran said it wants to ease tensions
with the U.S. over its nuclear program.
``There is speculation maybe the Iranian thing isn't quite
as bad as everyone perceived it was,'' said Bill Boeschenstein, a
broker at Dynoil Energy Inc in Cape Elizabeth, Maine. The
standoff with Iran ``has been one of the factors that's been
holding this whole market up for the last couple of weeks or
so.''
Inventory Increase
Gasoline futures have fallen about 8 percent since a
government report was released on May 3 that showed the first
rise in inventories in nine weeks. Inventories probably rose
again last week, according to a Bloomberg News survey of nine
analysts.
The Energy Department is scheduled to release its report on
last week's inventories at 10:30 a.m. in Washington on May 10.
The average U.S. pump price for regular gasoline fell to
$2.902 a gallon yesterday from $2.907 the day before, according
to the Web site of AAA, the nation's largest motoring club. Pump
prices were up 10 percent from a month ago.
June gasoline futures covering reformulated fuel to be
blended for use with ethanol, known as RBOB, fell 1.87 cents, or
0.8 percent, to $2.2486 a gallon in New York.
Heating oil futures for June delivery fell 0.16 cent to
$1.9545 a gallon in New York. Prices are 37 percent higher than a
year ago.
