October 13, 2008

Ethanol: Saving consumers more than $1 billion

The American Coalition for Ethanol today issued a news release (.pdf file) that said ethanol will save Americans more than $1 billion this year - simply because the average price of a gallon of ethanol is about a dollar less than regular gasoline.

That equates to a savings of $1 billion to $1.25 billion, according to ACE's Ron Lamberty.

Those savings are direct - and don't begin to factor in the savings to consumers from ethanol expanding our fuel supplies and helping to drive down gas prices. (That figure is about $70 billion.)

Lamberty said as ethanol production expands, refiners have a greater supply of "inexpensive, high octane, and clean burning ethanol to blend in to their gasoline. Ultimately, that makes more fuel available and drives down the prices at the pump."

Doing some additional math, ACE noted that at today's volume and prices, Americans would save $1.62 billion annually if every gallon of gas contained 10 percent ethanol. Moving to E15 would take the nation’s annual fuel savings $2.23 billion.

Lamberty noted that ethanol is the "most promising domestic supply of fuel this country has today. It doesn’t need to be drilled for or imported. It doesn’t require more years of laboratory study or significant changes to infrastructure. It is less expensive and a lot cleaner than gasoline, and it is here today."

The group also reminded us that the Grocery Gang spent (and is still spending?) a lot of money attacking ethanol this year - blaming ethanol for high grain prices, which would force them to raise prices. Now that grain prices have dropped (big time), have retail grocery prices followed? (Also see this post and this one.)

"Now that commodity prices have fallen, consumers should ask where the savings are," said ACE's Brian Jennings. "Ethanol was a convenient excuse for a multi-million-dollar PR campaign to justify price hikes on American consumers."

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