Ethanol Keeps Gasoline Prices $1.09 Per Gallon Cheaper

Friday, May 18, 2012

Excerpted from Food and Fuel America: May 15th, the Center for Agricultural and Rural Development released a study by economists at the University of Wisconsin and Iowa State University that examined the impact of increased ethanol consumption on wholesale gasoline prices. The study, authored by Professors Dermot Hayes and Xiaodong Du, concluded the following:

1. In 2011, ethanol reduced wholesale gasoline prices by an average of $1.09 per gallon.

2. Regular grade gasoline prices averaged $3.52 per gallon in 2011, but would have been closer to $4.60 per gallon without the inclusion of more than 13 billion gallons of lower-priced ethanol.

3. The average American household consumed 1,124 gallons of gasoline in 2011, meaning ethanol reduced average household spending at the pump by more than $1,200.

4. Since 2000, ethanol has kept gasoline prices an average of $0.29 per gallon cheaper than they otherwise would have been.

5. Based on the $0.29-per-gallon average annual savings, ethanol has helped save American drivers and the economy more than $477 billion in gasoline expenditures since 2000 — an average of $39.8 billion a year.

Read an abstract and the full report here (PDF file).

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