According to a report from Merrill Lynch, gasoline prices would be $21 per barrel higher without biofuels like corn ethanol. In other words, biofuels are saving consumers about 50 cents per gallon of gas at the pump. When you take that 50 cents per gallon times the average fuel use for a family, that savings adds up to $526 per household per year.
Merrill Lynch commodity strategist Francisco Blanch also estimated that U.S. ethanol production has increased corn prices by just 21% since 2004. Since only small changes in corn prices are passed through to retail food items, this means ethanol has increased household spending on retail food items by about $15 per year.
“By keeping gasoline prices lower than they otherwise would be, ethanol is helping the average American family save about $500 a year, even after accounting for the slight increase in food prices due to higher prices for corn,” Bob Dinneen, president of the Renewable Fuels Association (RFA), said in a news release.
In its news release, RFA provides the details, as well as a link to Merrill Lynch's full report. To access it, click here.
Separately, USDA and the Department of Energy have put out a new fact sheet on ethanol and biofuel use. It was part of a response to a request by Sen. Jeff Bingaman (D. - N.M.). The two departments estimated that biofuels save 20-35 cents per gallon or $150-300 per year for a typical household.
The full fact sheet is available here.
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