Analysis shows ethanol cuts gas prices by up to $1.50 per gallon

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An analysis released Monday credits the Renewable Fuel Standard (RFS) and increased ethanol production for saving consumers as much as $1.50 per gallon on gasoline.

Ethanol In his commentary, Energy economist Philip K. Verleger says the renewable fuels program has reduced annual consumer expenditures in 2013 by somewhere between $700 billion and $2.6 trillion. Based on that estimate, he says the RFS saves consumers between $0.50 and $1.50 per gallon.

Verleger's analysis shows crude oil prices are between $15 and $40 per barrel lower than they would be without the RFS. Price estimates are based on oil demand in addition to the energy created by the increased ethanol production.

According to Verleger, “Had Congress not raised the renewable fuels requirement, commercial crude oil inventories at the end of August would have dropped to 5.2 million barrels, a level two hundred million barrels lower than at any time since 1990.”

Some tests show last month’s crude oil prices could have sold for $150 per barrel without the program.

Read Verleger's commentary.



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rockingk    
MO  |  September, 23, 2013 at 10:13 PM

This must be the same economist that said ethanol production didn't raise the price of corn.

Pyainter    
Tallahassee, FL  |  September, 24, 2013 at 05:22 AM

Pure propaganda. Nothing more.

Dale    
Michigan  |  September, 24, 2013 at 05:38 AM

Of course, you purposely did not mention the billions of dollars that taxpayers pay to subsidize ethanol production. It actually costs consumers more to use ethanol, plus it has increased emissions and lowers gas mileage for vehicles.

BradR    
PA  |  September, 24, 2013 at 09:39 AM

Not to mention that it takes a bigger carbon footprint to create a gallon of gas with ethanol than would be created by just burning the regular gas. I agree with Pyainter; just pure propaganda.

Calixtus Reardon    
Indiana  |  September, 24, 2013 at 10:32 AM

It is funny to read these anti-ethanol comments. All of these folks somehow think that it is their birthright to buy corn for less than what it costs to produce. It is interesting that the Anti- ethanol resarch NEVER mentions the cost of the US military patroling the world's waterways protecting the shipment of Crude Oil wherever it may go. The anti-ethanol crowd also does not mention the subsidies that US farmers used to get for producing too much corn...That was a defacto subsidy for livestock producers...they just won't admit it. Ethanol has been overall a good thing for American agriculture and America.

Mike    
TN  |  September, 24, 2013 at 12:21 PM

HUGE government ethanol subsidies, HIGH production cost, INCREASED feed and food prices due to use of EDIBLE grain, REDUCED gas mileage, INCREASED engine damage, and CONSUMER cost is $1.50 LESS per gallon of gasoline? Frankly, I find this analysis HIGHLY suspect.

jack    
NE  |  September, 24, 2013 at 07:57 PM

Ethanol is a joke, i agree pure propaganda. Wouldnt last two seconds if governement wasnt holdings its hand the wole way. Capitalism is dying in this country daily.

C Langer    
minnesota  |  September, 25, 2013 at 04:11 PM

If ethanol is saving us money E85 should be a homerun. Go to fueleconomy.gov and compare E85 verses gas in flex vehicles. It cost over 20% more to use E85. Food cost for the average family has gone up over $2000 a year since this mandate started. Less than 4% of flex owners use it simply because of this. If the savings were as good as this Verleger says there would be no need to force E15 on the consumer because over 80% of flex owners would be using it. The lobbying money is the driving force and the consumer has nobody representing them.

Steve Baker    
MO  |  September, 26, 2013 at 09:34 AM

A little on EtOH production: Converting sunlight into portable fuel at a rate of 400 gallons/acre and have remaining, a high-protein feed source for livestock, is not understood by most Bostonians. Corn and soybean production are at all times highs. And this, in the face of urban sprawl covering 1000s of productive acres of farm ground/year with concrete, asphalt and buildings. Second point: there is not an industry out there that doesn’t receive a subsidy so you can dismount your high-horse and try to avoid the manure on the ground. If you support removal of all subsidies, we share a bit of common ground, but I don’t buy the selective targeting of grain/ETOH producers, as championed by the oil producers. Don’t you think it a bit unfair that ETOH producers should lose their subsidy while the remaining thousands of industrial subsidies are maintained?


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