How much has ethanol reduced gasoline prices - $0.29 - $.40 per gal Iowa State University

[JohnWxy]

http://www.card.iastate.edu/publications/synopsis.aspx?id=1076

Using pooled regional time-series data and panel data estimation, we quantify the impact of monthly ethanol production on monthly retail regular gasoline prices. This analysis suggests that the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case. The analysis shows that the negative impact of ethanol on gasoline prices varies considerably across regions. The Midwest region has the biggest impact, at $0.39/gallon, while the Rocky Mountain region had the smallest impact, at $0.17/gallon. The results also indicate that ethanol production has significantly reduced the profit margin of the oil refinery industry. The results are robust with respect to alternative model specifications.

Link to the full report below (be prepared this economic analysis is deep - not for the faint of heart):

http://www.card.iastate.edu/publications/DBS/PDFFiles/08wp467.pdf">The Impact of Ethanol Production on U.S. and Regional
Gasoline Prices and on the Profitability of the[br />U.S. Oil Refinery Industry
Xiaodong Du and Dermot J. Hayes
Working Paper 08-WP 467
April 2008]

[Warpy]

1. Gasohol here in the Southern Rockies is used for a different purpose

and that is to reduce smog in the valleys during the winter. I has done its job very well, and brown haze days are few and far between.

My car takes a grade of gas between regular and mid grade. I find I can alternate them during the summer, but need to stick to the mid grade in winter.

[MercutioATC]

2. Well, ethanol does have less energy per gallon, so it SHOULD lower the price.

[JohnWxy]

5. While the BTUs are lower, because it has an octane of 113-115 it can be burned at much

higher compression than gasoline (92-93 for high test). todays detuned engines can't take advantage of the higher octane. But Ford is working with MIT researchers to mass produce by 2011 an ethanol enabled direct injection engine which is turbo-charged and get 25% to 30% better gas mileage than a gasoline powered engine of similar power output.

BTUs is only part of the story. Octane rating is very important.

[MercutioATC]

6. Agreed, but as you mentioned, today's engines don't benefit.

[BlooInBloo]

3. No conflict of interest there.

[EmperorHasNoClothes]

4. Does that include what we pay for subsidies through our taxes?

Does it include the higher price we pay for food due to the increased demand for corn?

And, as has been pointed out already, ethanol has a lower energy density than gasoline, so you end up buying more gas.

I doubt it's cheaper if you consider all these factors, and it's probably considerably more expensive.

[JohnWxy]

7. Savings for oil not imported over cost of excise tax credit to blenders about $8 Billion in 2007

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x146285

http://www.geocities.com/jwalkerxy/savings_oil-not-imported.htm

Ethanol has a higher octane rating than gasoline. If current engines weren't detuned for gasoline you'd get better mileage with ethanol. http://www.greencarcongress.com/2006/10/startup_working.html">According to a simulation developed by the MIT group, with ethanol injection the engine won’t knock even when the pressure inside the cylinder is three times higher than that in a conventional SI engine. Engine tests by collaborators at Ford Motor Company produced results consistent with the model’s predictions.

with 6% to 10% blend to replace MTBE you don't notice any difference in mileage.

The excise tax credit to gasoline blenders is a return of gas taxes ($0.51) levied on blenders for every gallon of non-petroleum fuel (ethanol) they blend.

[FogerRox]

8. I used to buy Sunoco Ultra 94.... 94% gas 6% ethanol

Did wonders in my 1981 Mazda RX-7. I'd bet most cars would run with 5-6% ethanol these days.

[losthills]

9. Yeah, anyone who buys gas can see that the price

has gone down from around two dollars a gallon to FOUR----
oh wait a minute, I guess the ethanol boom has actually doubled the price of gas.

Such a deal......

[JohnWxy]

10. Lousy stock market outlook has caused money managers to move money into commodity futures

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x146578

[NickB79]

11. So, it saves the average driver $170 per year

If the average driver drives 12,000 miles per year and their vehicle gets 25 mpg, that's 480 gallons of gas. Rounding up to 500 gallons just for good measure, and using the average of the two savings figures ($0.345), that comes to $172/year, or $3/week.

Now, how much has the cost of food increased due to biofuels like corn-based ethanol? Milk alone has increased about $1/gal, so that alone adds $52/year to the average family's grocery bill. Meat is up, eggs are up, other dairy products are up, bread is up, etc. I know my grocery bills have increased far more than $3/week in the past 2 years, far more than that in fact.

[JohnWxy]

12. a much bigger factor in commodity price increases is the movement of money outof a shitty

stock market and into commodities (lead by hedge funds). really, biofuels is a small factor compared to this.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x146602#146629

and a businessweek article:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x146583

[JohnWxy]

13. On the other hand, oil not imported because of gasoline replaced by ethanol saved us about $8 Bil

http://www.geocities.com/jwalkerxy/savings_oil-not-imported.htm