Analysts credit Missouri E10 mandate for lowest gas prices in the country

In Missouri, analysts are scrambling to come up for reasons why the state has the lowest gas prices in the country. According to the St. Louis Post Dispatch, gas is averaging as much as 10 percent less than the cost of gasoline in other states. Lower gas taxes, proximity to major oil pipelines and the presence of low-cost gasoline at major retail outlets are cited as contributing factors, but the state’s switch to E10 has been the most widely credited factor in the price differential. Slate.com said that Missourians stand to benefit by at least 10 cents per gallon from the ethanol mandate.

Missouri background

In March, the state Senate passed a new measure mandating a B5 or higher blend in all diesel fuel sold in the state. The measure now moves to the House for approval. Missouri, which enacted an E10 mandate in January, would become the sixth state to establish a biodiesel mandate.

Gov. Matt Blunt has been accelerating Missouri to a leadership position in biofuels. Last month, he announced a series of tax incentive proposals designed to promote biofuels. The governor proposed $2 million in tax incentives for gas station owners converting to E85, and tax credits for consumers who buy E85 or a hybrid vehicle.

Missouri’s E10 mandate took effect January 1st. With the new law, Missouri joins Minnesota and Hawaii as the only states mandating E10. Most Missouri stations switched months previously, and the transition as reported to be smooth.

Missouri has a unique feature in its ethanol mandate allowing fuel retailers to switch back to unblended gasoline if the price of ethanol exceeds the price of gas. There are concerns that, if the price of ethanol drops below gas and retailers again sell E10, that they will have co-mingled fuels in their tanks that would bring them below the minimum blending requirement.

On the production side, Missourian ethanol plant development has slowed to a standstill, according to the state’s Department of Natural Resources. After boom conditions in recent years, no new plants have submitted new or revised permit applications since July, and of three plants that had previously received construction permits, none have proceeded to begin construction.

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