Notes from the State Captiol

A closer look at tumbling gas prices and more

by Representative Paul Anderson

Consumers pulling into gas stations all over the nation are smiling at the prices they see posted on the pumps. The worldwide price of crude has been in a free-fall the past few months, and those lower prices for oil are showing up at the pump. 

The price of gasoline, which was between $3 and $4 per gallon last summer, is now under two bucks as we all take advantage of these new, lower prices for energy. It’s been at least five years since we’ve experienced this level in the cost of gasoline. And since it takes about half the amount of money to fill up as it did at the height of gas prices, one positive result is a tremendous amount of additional spending power left in consumers’ hands. Overall, this is very positive for the U.S. and world economies.

We may be approaching a case of “too much of a good thing” in terms of its effect on other segments of the economy. The value of crude oil dropping by 50 percent obviously has serious implications for those who produce energy. States such as North Dakota, Oklahoma and Texas are seeing their tax revenue from oil dropping. Also being affected are those in the business of producing ethanol, and in this case, the impact is dramatic. Coming off a year of excellent profits, caused mainly by the drop in the value of corn, ethanol production has gone to a break-even proposition at best in just a few short months. As the price of gasoline has come down, so has the value of ethanol. Hovering near $1 per gallon, the current price is below the break-even point for many producers and they are losing money.

Those in attendance at last Saturday’s annual meeting of the Chippewa Valley Ethanol Company in Benson heard a presentation by Logan Caldwell of Kingwood, Texas. He explained that ethanol will continue to be blended with gasoline because of its boost to the octane rating. He sees a value of at least $1 per gallon of ethanol because of that reason alone. Mr. Caldwell also said he believes the oil companies would continue using ethanol as an octane booster even without the federal mandate of the Renewable Fuel Standard.

 While on the subject of energy, another major change from just a year ago pertains to propane. Last year at this time, we were dealing with skyrocketing prices of LP and shortages of product. This year, thanks to less being used for corn drying and a much milder winter so far, supplies of propane are in good shape. Several suppliers also made significant investments in larger storage facilities, which has also helped the supply situation. In addition, as with other forms of energy, the price of propane has also moderated.

A bill was introduced last week that’s the result of a working group dealing with the subject of child neglect or abuse. Similar to legislation I introduced, it calls for the repeal of state law that says authorities cannot use “screened out” reports when dealing with potential cases. This larger bill also mandates that all reports of possible abuse or neglect be reported to law enforcement, in addition to social workers relying less on family assessments and more on intervention. This legislation comes as a result of the highly publicized case in Pope County that resulted in the death of a 4-year-old boy.