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NEWS THAT'S NONSENSE

Published: Tue. Aug 21st, 2012

From WLS Radio to cable TV news to even the AAA, you might have heard the announcer say, “gasoline is more expensive because of ethanol.” We’ve had several calls and emails to this office asking to shed a little light on this subject. In this case, we can definitely say, this news is nonsense.

Ethanol is cheaper than gasoline at wholesale prices, and that’s a fact. The spread between the prices has changed throughout the year, but ethanol has remained the lesser expensive of the two components. See the chart below for the numbers.

 

Spot Ethanol

RBOB Gas On NYMEX

Rack Price [Location]

 

August 20, 2012

August 20, 2012

Chicago

$2.63

$3.0272

 

New York

$2.60

$3.0272

Ethanol has, in fact, moderated gas prices. Because it’s remained less expensive than gasoline, blenders can add ethanol and pass along the price savings to consumers at the pump. Without ethanol, gasoline would cost $0.20-$0.35 cents more per gallon.  That translates into an additional $6.00-$10.50 to purchase 30 gallons a month.

So the next time that you hear that gas is more expensive because of ethanol, you can comfortably set the record straight.

 
 
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