March 24, 2008

Ethanol Saves Us All Money At The Pumps

Ethanol lowers fuel costsToday 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.


Anonymous said...

Saves us all money???? My Dodge goes from 19mpg with regular unleaded to 11mpg with Ethanol. At that rate I can't afford to save money.

Nice thought tho'.

Michael A. Gregory said...

I assume that you are talking about E85 since what you are claiming is greater than a 40% loss in fuel mileage. And given the fact that I have never seen a legitimate study that have shown losses that high for E85 I am skeptical of your claim.

But it is possible.

My last car was a 2004 Mustang Cobra. I normally got 21 mpg. On one tank though it took 13 gallons to go 190 miles or 14.6 mpg. In both cases on straight gasoline. Why the difference? I had installed some go fast goodies and was driving it in such a way to see what difference the new parts had made on the performance. In other words the difference was the way I drove.

Knowing that driver variables can make such a large difference I always take user testimonials with a grain of salt.

Anonymous said...

I work in the fuel industry and I can assure you that the above miles per gallon loss wasn't due to ethanol being added to your gas. It's funny to see stations advertis use they sell 100% gas and then have the gall to try and sell it for 20-30 cents per gallon higher. If there is a small loss per gallon by using ethanol blends it is more than offset by the savings it provides.

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