Gasoline suppliers, blenders, and even some retail chains are taking a hard look at 2008 ethanol prices. They're not necessarily thrilled with the absolute price of alcohol, but they are tickled to death by the prospect of buying ethanol some 20-30cts/gal below gasoline blendstock. Last week, for example, it was possible to lock in Calendar 2008 ethanol supply in Chicago at a price of about $1.75/gal. The price of New York-based RBOB in the same period was about $2.04/gal. The discount of nearly 30cts/gal has intrigued companies who believe that ethanol might represent the best bet for enhancing rack-to-retail margins. It also might be a good year to "go green" since presidential politics will include plenty of pro-ethanol rhetoric from candidates.
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