June 14, 2011

Does Ethanol Really Have a Future? Why yes it does!

By Lance Atwater, NCB Intern

Today, everyone is feeling the squeeze at the pump. What happened to the good ole days when gas was only $0.31 a gallon? Unfortunately, we aren’t seeing those 1960 prices anymore, and probably never will. Today, according to AAA, the average price for a gallon of regular gas is $3.75. That is a dollar more than what we were paying for last year, which was $2.71.

Now, it seems like what we currently are paying for is a lot, and it is, but did you know we could actually be paying for a lot higher gas prices if it wasn’t for ethanol? A study done by economists at Iowa State University and the University of Wisconsin shows that ethanol actually reduces gas prices by $0.89 a gallon. That is almost an entire dollars worth! When calculating this out, gas prices would actually be $4.64 if it was not blended with ethanol! If you think we have it bad now, just imagine if you saw this price at the gas pump!

We can clearly tell what it would be like if gas wasn’t blended with ethanol, but lately there has been people and groups saying ethanol has no future. One of the hot topics is whether ethanol should receive subsidies or not. There is no doubt our country needs to make cuts to reduce its debt, but cutting out subsidies for alternative energies may not be the best solution.

When looking at the amount of subsidies that the ethanol industry receives compared to the oil industry, ethanol receives very little. The oil industry receives between $130-280 billion while the ethanol industry only receives $17 billion. Why should we cut ethanol subsidies when, 1) it receives a much smaller amount of subsidies compared to the oil industry, and 2) it actually reduces the cost of gas at the local pump. We sure don’t see oil subsidies reducing the price of gas! Not only does ethanol reduce gas prices, but it also helps reduce the amount of emissions that vehicles give off.

Now, when talking about support, we aren’t just thinking about subsidies because honestly subsidies are not what keeps the ethanol industry going. This industry needs support from the auto manufacturers who make the flex fuel vehicles and most of all the industry needs support from the consumer. When consumers invest in ethanol, they are not only investing in this industry but they are also investing in our country’s economy. However, that is not always the case with oil. When we invest in oil, our money ends up going to economies overseas.

Ethanol has a future, and don’t let anyone tell you different. With ethanol we aren’t just reducing emissions and the costs of energy, but we are also insuring that our country will someday be energy independent.

Check out other recent blog posts about ethanol:
Ethanol plays key role in fuel supply, helps lower prices
Saudi prince wants cheaper oil so you stay hooked and forget about ethanol
Finding the solutions to feed, fuel the world
A myth is still a myth when it comes to corn and ethanol, food and fuel

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