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ETHANOL SAVES CONSUMERS HUNDREDS OF DOLLARS A YEAR

Published: Tue. Mar 6th, 2012

wholesale gasoline vs wholesale ethanolGasoline prices top the headlines locally, nationally, and across the globe.  We have yet to hit the typical summer hike, but instability in foreign countries has forced the price to its highest level since May 2011 despite the fact that demand has fallen to its lowest point in more than a decade.  The national average retail price for regular grade gasoline hit $3.79/gallon last week, $0.27/gallon higher than at the same time last year and $1.04/gallon higher than the same week in 2010. 

Ethanol is the only immediate relief from fuel prices that are spiraling out of control.  Blends of 10 percent ethanol constitute 90 percent of our nation’s fuel supply, and with a spread today of 80 cents to $1.10 between wholesale ethanol and wholesale gasoline, ethanol blends are saving consumers meaningful cash.

In a 2011 paper published by the Center for Agriculture and Rural Development (CARD), economists from Iowa State University and the University of Wisconsin found that the use of more than 13 billion gallons of ethanol reduced gasoline prices by an average of $0.89/gallon in 2010.  That means the average American household spent $800 less on gasoline than would have otherwise been the case without ethanol.

Not only is ethanol cheaper than gasoline giving blended fuels a cost advantage, but ethanol also reduces the demand for foreign oil.  Since 2005, the year in which the Renewable Fuel Standard (RFS) was first enacted, America’s oil demand has decreased and national oil import dependence has fallen from 60% to 45%.  Meanwhile, ethanol has grown from 1% of the nation’s gasoline supply to 10% today.  As the world’s largest oil consumer, extending our oil supply with renewable fuels helps put downward pressure on petroleum prices and keeps them lower than they would be otherwise.

Corn-based ethanol is a meaningful solution to the petroleum addiction America faces.  And it is not only a meaningful solution, but it is a solution that is available right now, ready to lower consumer costs at the fuel pump.  Higher blends, flex fuel vehicles, and other infrastructure will help continue to provide significant cost savings to consumers in the years to come.

 
 
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