Today the American Coalition for Ethanol (ACE) released a press release detailing how ethanol's use is saving motorists at the pump.
“The growing availability of ethanol across the United States is reducing the cost of gasoline by up to nine cents a gallon,” said Brian Jennings, Executive Vice President of ACE. “While gas prices are still causing pain at the pump, ethanol is alleviating some of the pressure of hundred-dollar oil. Without ethanol, gas prices would likely be even higher.”
According to recent price reports by Axxis Petroleum and the Oil Price Information Service, ethanol for blending is selling for as much as 10 to 35 cents lower than gasoline, depending on the market. Factoring in the blender’s tax credit, this means that the wholesale cost of E10 is between 6 and 9 cents less per gallon than gasoline.
“The price of gasoline isn’t rising as quickly as the price of diesel, partly due to the fact that there’s an alternative to gasoline – ethanol – that’s adding more than 2 million gallons a day to our nation’s fuel supply,” noted Ron Lamberty, ACE’s Vice President / Market Development.
While I agree with the press release, I would like to expand just a bit on how ethanol is benefiting motorists beyond the effects of ethanol's lower price.
Because of the fact that no new refineries have been built in this country since the 1970s and the fact that since that time the oil industry has consolidated and closed quite a few smaller refineries, we now have what is commonly referred to as "limited refinery capacity". In other words we don't have enough refinery capacity to meet the countries needs for refined petroleum products. And because of this we import gasoline from foreign sources to help meet demands. This tightness of supply and the additional costs associated with having to import gasoline causes increased prices at the pump.
By adding to the fuel supply, ethanol production in effect adds to the nation's refinery capacity and limits the amount of finished gasoline that has to be imported. And that saves us all money at the pump whether the gasoline we are buying contains ethanol or not.