As gas prices hit all-time highs – not adjusted for inflation, of course – it appears that the media are missing a fabulous opportunity to rightly or wrongly blame the problem on President Bush.

Since press representatives rarely pass up such a chance, one has to wonder what’s causing this peculiar oversight.

An article published Monday by Reuters might give us a clue.

Astonishingly, though it didn’t go far enough to identify the real culprit for the recent price rise, Reuters did indeed point a finger at an extraordinarily unlikely target (emphasis added):

Gasoline prices are up about 50 cents since March, with energy experts blaming this year's spike on planned maintenance and breakdowns at U.S. refineries struggling to meet tough environmental fuel regulations.

"Because oil prices today are at least $10 less expensive per barrel than when gasoline prices previously exceeded $3 a gallon, almost all of the price pressure on gasoline can now be attributed to America's continuing -- and increasing -- inability to supply enough refined gasoline to the marketplace," AAA said in a statement earlier this month.

Unbelievable. An American media outlet actually tied this problem to “tough environmental fuel regulations.”

Of course, they couldn’t be more right. Unfortunately, the article didn’t go far enough and truly identify one likely cause of the real problem: ethanol.

Now, I know making such a statement is heresy in today’s green environment. But consider that wholesale unleaded gasoline is currently trading on the New York Mercantile Exchange for $2.30 a gallon. This is roughly what it was going for at this time last year.

However, as Reuters correctly pointed out, oil is trading at almost $10 less per barrel than last May. As such, the source of gasoline is about fourteen percent cheaper than last year, but the refined product we put in our cars as identified by AAA’s Fuel Gauge Report is actually five percent more expensive.

Rather absurd, wouldn’t agree? Can this be in any way tied to ethanol?

Well, consider that wholesale gasoline for delivery in February 2008 is only trading at $1.82/gallon. That means that current wholesale gas is theoretically 27 percent more expensive than nine months from now.

In commodities lingo, this is called a "backwardation," and is typically caused when a lack of supply today is driving up current prices, but that supply problem is not expected to last forever.

Now, as we know that new refineries aren't expected to suddenly appear, the market isn't projecting an increased supply due to increased refinery capacity, correct?

Of course, there are currently some refineries experiencing difficulties that could explain part of the backwardation. Furthermore, greater demand for gasoline during the summer driving season normally causes some increase in prices at this time, thereby making a backwardation not uncommon.

However, a backwardation does not exist in oil prices. In fact, the opposite is currently in place known as a contango, which is when prices increase in the forward-trading months later in the year or in subsequent years. In this case, February 2008 oil is trading for $6 more than the current $62 price.

Add it all up, and though oil is trading ten percent higher in the February 2008 contract,  gasoline for the same month next year is 21 percent less expensive than today’s price.

Why the anomaly? Well, one logical explanation is the cumbersome transferrance by the nation’s refineries from government-mandated winter gasoline blends to summer blends which for environmental reasons in heavily populated areas prone to smog should be ethanol-free.

Californians have been experiencing this problem for many years, as this state was well ahead of the curve in requiring cleaner burning summer gasoline even before ethanol was involved. And, as winter turned to spring, every year gas prices in California exploded as refineries converted from winter to summer blends.

Unfortunately, as ethanol blends are now mandated by Congress, this has become a national problem that isn't going to go away any time soon. In fact, it will likely get worse, as the Energy Policy Act of 2005, signed into law August 8 of that year, required oil companies to triple their level of ethanol-blended gasoline by the year 2012.

As odd as it might seem, the California Environmental Protection Agency came out strongly against this bill in a letter to Sen. Dianne Feinstein (D-California) in May 2005: 

If the national [Renewable Fuels Standard] requirements exceed California’s capacity to avoid ethanol’s use during the summer smog season, the consequences are significant. The California Air Resources Board estimates that on a hot summer day, an additional 75 tons per day of smog forming pollutants are now being emitted. To put this number in perspective, it is equivalent to almost a five percent increase in ozone forming pollution from all gasoline powered motor vehicles and equipment in the State.

Interesting, wouldn’t you agree? Or didn’t you know that ethanol blended gasoline actually adds to ozone forming pollution, and that this is why states like California have been going through huge refinery changes every winter – and dramatically higher spring and summer gasoline costs – to comply with clean air requirements?

As this has now been spread throughout the country via the 2005 energy bill, such supply constraints are now impacting refineries coast to coast, a dirty little secret that the media don’t want you to be aware of.

To be sure, Americans experienced the first negative ancillary “benefit” of this bill in the spring and summer of 2006 as wholesale unleaded gasoline went from $1.40/gallon in February to almost $2.40 by July. At the time, a government mandated switch away from MTBE as a fuel additive to ethanol wreaked havoc on refiners. Yet, as the winter months approached, and refiners moved away from costly summer blends -- certainly combined with a weaker than expected hurricane season which drove oil prices down -- wholesale gas plummeted right back to $1.40/gallon by October.

As we are repeating a very similar pattern so far this year, it seems that this energy bill, though conceivably well-intentioned, is just another example of how government interference in the free market typically fails.

With that in mind, since the press seem always concerned with high gas prices – please review the Business and Media Institute’s recent examination of this subject entitled “Media Myth: Gassing Up” – why has there been no call for Congress to revisit the 2005 energy bill and amend or postpone some of these ethanol requirements?

After all, as ethanol blended fuels are less efficient from a miles per gallon standpoint than regular unleaded gasoline, Americans for the past two years have been hit with the double whammy of paying significantly more for gas in the summer while having to fill up their tanks more often in the winter.

Isn’t this something the supposedly economy-minded media should concern themselves with? Or, is their desire to promote environmental causes much more important than saving folks money?

Could there even be something significantly more nefarious in play, such as the media’s global warming agenda and their love affair with soon-to-be-Dr. Al Gore?

Think about it. For more than two years, press members have been banging citizens over the head with visions of thawing glaciers, drowning polar bears, and flooded cities all caused by the new catchall buzzwords “climate change.”

As one of the cures for this supposedly manmade malady is a reduction in the usage of oil, how can the media dare suggest that one of the supposed panaceas is actually costing the public a lot of money, and failing miserably in attaining its advertised goals?

When you factor in the added cost, lower fuel-efficiency, and higher smog-producing pollutants inherent in ethanol as an additive, how could the press not be screaming bloody murder over this issue?

This is especially the case given that President Bush backed this legislation, as did former House Majority Leader Tom DeLay (R-Texas). And, the fact that Sen. Hillary Clinton (D-New York), the leading Democrat candidate for president in 2008, voted against this bill appears to give the press even greater incentive to tear it apart.

As such, the question remains: Why aren’t the supposedly environment-friendly press coming after this bill as gas prices hit new non-inflation-adjusted highs?

Could it be that their love for Al Gore and advancing his global warming hysteria is actually more important?

Before you suggest that I’ve jumped the shark on this one, consider that Gore has been a strong proponent of ethanol for many years. As reported by “On the Issues” in 2000 (emphasis added):  

Vice President Al Gore maintains that “it’s well known that I’ve always supported ethanol. I have a consistent record of shoring up the farm safety net.” Gore, who as vice president cast a tie-breaking vote in 1994 against a proposal Senator Bill Bradley sponsored to cut tax incentives for ethanol fuel, adds that “I have not ducked when votes for ... agricultural interests were on the floor.”

[…]

“Our administration’s goal is to triple the use of biomass technologies, ethanol, gasoline additives, plant-based textiles and other environmentally friendly products by 2010.”

As Gore has admittedly been a proponent of ethanol since at least 1994, any media scrutiny of this alternative fuel will make him look a bit foolish, and possibly could derail his entire manmade global warming mission.

After all, if ethanol is proven to be less of a global warming solution than has been advertised, and is costing Americans a fortune for conceivably less clean air, maybe the rest of Gore’s ideas on climate change are equally daft.

Though it seems very much up the media’s alley to expose as faulty a bill strongly supported by a president they hate, while coincidentally showing themselves to be wonderful consumer and environmental advocates, such goals in this instance seem to be taking a back seat to protecting Gore and his not so merry band of global warming alarmists.

Maybe this is a rare occasion when conservatives should feel sorry for the press, for it clearly must be difficult to pass up such a fabulous Bush-bashing opportunity.

On the other hand, as Scarlett O’Hara said, tomorrow is another day.

—Noel Sheppard is the Associate Editor of NewsBusters.