Ethanol Brings Gas Prices Down, Saves Consumers Money
As controversial as corn-grain ethanol is, it may be offsetting high oil prices and saving consumers between 6 and 9¢ per gallon on fuel.
Research by the American Coalition for Ethanol (or ACE – totally unbiased, I know) found that gasoline-ethanol blends are selling 10-35¢ lower than non-blended gasoline, which after factoring in the ethanol-blender’s tax credit amounts to about 6 to 9¢ per gallon.
This may also help explain why diesel is so much more expensive than gasoline right now:
“The price of gasoline isn’t rising as quickly as the price of diesel, partly due to the fact that there’s an alternative to gasoline – ethanol – that’s adding more than 2 million gallons a day to our nation’s fuel supply,” notes Ron Lamberty, ACE’s vice president/market development.
Half the gasoline in the United States is already blended with 10% ethanol (E10), and that ratio may change due to this research. Based on the ACE’s report, Marathon Oil and ExxonMobile announced they would no longer be selling non-blended gasoline at several of their gas stations.
Personally, I’d rather pay a bit more for a non-food based biofuel. But the US now has the capacity to produce 7.9 billion gallons of ethanol annually, and it’s going to be a while before any of the alternatives, like cellulosic ethanol, catch up.
In the mean time, aren’t we paying that extra 6-9¢ somewhere else, like in the form of the 51-cent-per gallon excise tax exemption that gasoline blended with ethanol gets? Not everyone even agrees that ethanol blending lowers gasoline prices, but it’s food for thought (or your gas tank anyway).
Source: Corn & Soybean Digest (Mar. 26, 08): New Fuel Price Data Shows Ethanol’s Cost Savings for Consumers
Photo Credit: Nebraska Ethanol Board