By Jim Melwert
PENNSAUKEN, N.J. (CBS) – Natural disasters, like hurricanes, can have an effect on gasoline prices — but what about a drought? Analysts say the lack of rain in the midwest is a key factor in the recent run-up of prices at the pump.
Gasoline prices jumped over five percent in July; AAA says that’s the largest increase for the month since they started keeping records 12 years ago.
The travel group says that increase has little to do with the typical factors, like oil supplies or driver demand.
This run-up, they say, has to do with the drought in the midwest. That drought is hurting corn yields, and that’s driving up the price of corn-based ethanol. By law, ethanol accounts for 10-percent of all the gasoline we use.
Frustrated drivers this morning, say, it seems there’s always a reason for prices to go up.
“The hurricanes, now it’s droughts, next it will be winter’s coming and people will use too much [oil] for heat. They just keep making new excuses to drive the prices back up.”
Because of the drought, corn’s climbed to record highs, pushing ethanol prices up 17-percent just in July.
More than a third of the corn crop is used for ethanol to meet the EPA’s 10-percent requirement. It’s also driving up chicken and beef prices. Meat producers have asked the government to suspend the ethanol rule to free up some corn, but experts say that’s not likely to happen.