Ethanol Brings Gas Prices Down, Saves Consumers Money

  • Published on April 2nd, 2008 by
 

ethanol, e10, biofuel, corn, gas prices, fuel 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

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Photo Credit: Nebraska Ethanol Board





About the Author

In a past life, Clayton was a professional blogger and editor of Gas 2.0, Important Media’s blog covering the future of sustainable transportation. He was also the Managing Editor for GO Media, the predecessor to Important Media.

  • Jim

    Sorry but I don’t buy it. Ethanol has less energy content than gasoline, so the cars will get less gas mileage with the ethanol blends than the pure gas. This is just voodoo tax rebate economics. Independent sources and reports, for example from The Economist and the Chicago Tribune and the Washington Post all indicate that corn-ethanol has absolutely zero effect on gasoline economics, but is now having a significant effect on food prices, including the price of eggs (because corn is too expensive to feed to chickens now). References to many of these articles can be found at my blog, or by a web search. Nice try ACE, but no cigar from me!

  • Jim

    Sorry but I don’t buy it. Ethanol has less energy content than gasoline, so the cars will get less gas mileage with the ethanol blends than the pure gas. This is just voodoo tax rebate economics. Independent sources and reports, for example from The Economist and the Chicago Tribune and the Washington Post all indicate that corn-ethanol has absolutely zero effect on gasoline economics, but is now having a significant effect on food prices, including the price of eggs (because corn is too expensive to feed to chickens now). References to many of these articles can be found at my blog, or by a web search. Nice try ACE, but no cigar from me!

  • J

    This is complete BS and I declare shannanigans. Ethanol requires large amounts of gas and diesel, not to mention crops, drinking water (which becomes toxic), and other ingredients of high-transformity.

    The ethanol and energy policy forcing it in to production has raised the cost of fuel while simultaneously increasing the cost of food, water, land/crops and decreasing the value of the dollar. If we do not stop making ethanol I can say that gasoline, water, diesel, and food will become expensive enough to drive us in to a third-world country status.

  • J

    This is complete BS and I declare shannanigans. Ethanol requires large amounts of gas and diesel, not to mention crops, drinking water (which becomes toxic), and other ingredients of high-transformity.

    The ethanol and energy policy forcing it in to production has raised the cost of fuel while simultaneously increasing the cost of food, water, land/crops and decreasing the value of the dollar. If we do not stop making ethanol I can say that gasoline, water, diesel, and food will become expensive enough to drive us in to a third-world country status.

  • J

    the reference: “Corn & Soybean Digest”

    this sounds like a pamphlet from some oil-company-turned-corn-farmer. I would be in shock if the author of this is not being directly solicited by them as well.

  • J

    the reference: “Corn & Soybean Digest”

    this sounds like a pamphlet from some oil-company-turned-corn-farmer. I would be in shock if the author of this is not being directly solicited by them as well.

  • I agree with Jim. Ethanol is a nice supplement, but won’t perform well as a complete substitute.

    The blend is a temporary fix for a long term problem. Spend the money on alternative sources like winder, water, and sun. God gave us all 3 above ground; So why do we always dig and make things more difficult?

  • I agree with Jim. Ethanol is a nice supplement, but won’t perform well as a complete substitute.

    The blend is a temporary fix for a long term problem. Spend the money on alternative sources like winder, water, and sun. God gave us all 3 above ground; So why do we always dig and make things more difficult?

  • When will my plug in electric with battery charging small gas engine and solar panel body hybrid car be available? 🙁

  • When will my plug in electric with battery charging small gas engine and solar panel body hybrid car be available? 🙁

  • gas sucks

  • gas sucks