April 23—The seasonal push for higher gasoline prices was in full swing in April. Commercial and investment buying stepped in, looking to take advantage of the upward market potential, leading into higher demand from drivers planning summer trips with the economy looking slightly better. Through April, gasoline prices posted a 20 to 25 cent-per-gallon rally in all markets, inching toward $3 at the pump. Consumers seem willing and able to pay the higher prices. This may help push prices higher if market support develops in the stock market, as increased investment money filters into commodity markets. This could push prices well above $3 per gallon for consumers.

Typically, when gasoline prices move higher, positive results are also seen in the ethanol market. This year the case has been very different. Even though gasoline prices jumped sharply in the end of March, ethanol prices were steady to 5 cents lower across the country than the previous month. The softness in the corn market, as well as eroding ethanol margins, limited upward movement in all ethanol markets. Traders are not interested in stepping into longer-term purchases as they fear additional price pressure may be around the corner, leaving ethanol to be bought hand to mouth at a time when supplies are nearing burdensome levels. The wide price spread, currently at 77 cents per gallon, is creating concern that the market will not be able to rebound in the near future despite significant changes in production.