April 27, 2008

Iowa State Study : Ethanol Saves Motorists Money

Iowa State researchers find that ethanol saves motorists money at the pump.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


Anonymous said...

Gee, Guys... Save money? When my mpg goes from 19 with regular unleaded to 11 with Ethanol, I cannot 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.

Post a Comment