Researchers at the Center for Agricultural and Rural Development at Iowa State University have released a study that shows ethanol blended into the fuel supply has caused retail gasoline prices to be 29 to 40 cents lower than what they otherwise would have been.
The study noted that ethanol has helped to keep prices low by adding to the refinery capacity in the country which is already at or near capacity.
These reductions in retail gasoline prices are surprisingly large, especially when one considers that they are calculated at their mean values over the sample period. The availability of ethanol essentially increased the “capacity” of the U.S. refinery industry and in so doing prevented some of the dramatic price increases often associated with an industry operating at close to capacity.
The study also noted that ethanol has significantly reduced the profit margin of the oil refinery industry.
Source : The Impact of Ethanol Production on U.S. and Regional Gasoline Prices and on the Profitability of the U.S. Oil Refinery Industry