Does ethanol blending really reduce American gas prices by 45 cents a gallon?
The Ethanol Promotion and Information Council (EPIC) is never going to say anything bad about ethanol. It's an organization made up of ethanol producers and industry leaders and their whole job is to, well, promote ethanol. But the group's latest pro-ethanol release is a bit astounding: "According to experts, if every gallon of ethanol were removed from today's gasoline supply, per gallon gas costs would rise an estimated 45 cents, making the national average for fuel nearly $4.00 dollars per gallon."The release continues: "Ethanol is blended in 46 percent of the nation's gasoline, reducing U.S. dependence on foreign oil, and lowering costs, by providing a renewable source of energy. By the end of 2007, nearly 140 plants will be producing approximately seven billion gallons of ethanol."
The release doesn't get into specifics, but it seems like there's a bit missing here. Take, for example, the matter of the 51-cent-per-gallon Federal tax credit, which costs every American and benefits the ethanol industry. A study released last October by researchers at Iowa State University (available here in PDF), estimated that "the removal of trade distortions and 51¢ per gallon tax credit to refiners blending ethanol induces a 16.5 percent increase in the world ethanol price." Let's say that rate of increase would be transferred directly to the price of ethanol at the pump and we see a jump of 16.7 percent to a $3.50 gallon of gas. I'm not sure that would happen, but if it did, the result would be $4.08 for a gallon of gas.
You can read EPIC's original release at the Read link.
[Source: Ethanol Promotion and Information Council]
Reader Comments (Page 1 of 1)
TX CHL Instructor 3:26PM (6/03/2007)
Short answer: No.
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Jimmy 5:14PM (6/03/2007)
Why not link to the article ? http://www.drivingethanol.org/news_events/epic_news.aspx?id=145
Perhaps the reasoning is that ethanol production is helping to offset the shortage of gasoline refinery capacity. At the moment, gasoline prices spike if a refinery shutdowns down for any reason. If ethanol production were removed from the market it would be similar and retail prices would spike.
Considering that no new petroleum refineries are being built in the US, but many ethanol plants are under construction, ethanol will likely plan an ever increasing role in our energy supply.
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Jimmy 5:37PM (6/03/2007)
"Federal tax credit, which costs every American and benefits the ethanol industry"
This nonsense just can't go unchallenged. The federal tax credit supports a domestic, renewable clean fuel and provides a new market for farmers' crops. The "ethanol industry" includes millions of farmers and rural americans. Ethanol also displaces imported petroleum; reducing our *huge* trade deficit.
There are Federal tax credits for ethanol, biodiesel, solar energy are beneficial to all Americans!
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Andrew 5:49PM (6/03/2007)
A about a month ago when gas prices just started to jump my family went on a road trip. Being that we are in the midwest i noticed the Price of regular gas was around 3.10 and ethanol was 2.70.
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Sebastian Blanco 7:17PM (6/03/2007)
Jimmy,
thanks for linking to the original. I usually do, and just must have cut and pasted the wrong URL for this one. I've updated the post to included the direct URL.
As for the "nonsense," it certainly does cost every American (well, everyone who pays taxes) and it does benefit the ethanol industry. That's not nonsense. Some people think that ethanol helps us all, some don't. I didn't take a stand on it here, as I think it's clear from our many posts on the topic that we have an open mind about it. Some aspects are truly good, some not so much. You can check out my visit to an large ethanol plant last week to see that I'm more than happy to let ethanol advocates give their point of view. It's even got video.
http://www.autobloggreen.com/2007/05/30/abg-visits-50-million-gallon-per-year-ethanol-plant-video/
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GreyFlcn 12:05AM (6/04/2007)
More or less Ethanol is a joke.
I'll start off with the first batch of common misconceptions.
http://www.greyfalcon.net/ethanol.png
http://www.greyfalcon.net/brazil.png
http://www.greyfalcon.net/ethanol4.png
And leave you the option to read further into this complex issue.
http://greyflcn.blogspot.com/2007/06/ethanol-education.html
The short of it, if you want to reduce global warming, clean the air, and create energy independance.
Then Ethanol is just going to make things worse.
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frank78 10:09AM (6/04/2007)
If ethanol is EVER going to be taken seriously, the 54 cent per gallon subsidy needs to be removed. If people still want to buy it after that, then its worthiness can actually be tested. Corn ethanol = welfare. Welfare. Welfare.
And it does nothing to help reliance on petroleum. Until ethanol is produced large scale from garbage waste (MIT) or cellulosic methods for at least 80 cents less than through corn, ethanol deserves the same fate as the dinosaurs.
The corn ethanol production continues for one and only one reason- Iowa. One of the first presidential primaries. If it were one of the last presidential primaries, these politicians wouldn't be backing ethanol much if it all. Ms. Rodham Clinton voted 'no' on ethanol 14 times until she decided to run for president. Now she's all goo-goo for it because it advances her political power. Same goes for both sides of the political aisle.
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Don 6:25PM (6/05/2007)
Wow. Kudos from the very men who have already conned us into believing ethanol is our savior?
Bullsheet.
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