U of I's Hauser: Increased Ethanol Production Will Not Affect Gas Prices

Increasing ethanol production in the United States will have a negligible effect on gas prices because of the biofuel’s minor status in the fuel spectrum.

That was part of the message from Dr. Robert Hauser, head of the Department of Agricultural and Consumer Economics at the University of Illinois, Urbana-Champaign UIUC).

Hauser, along with fellow UIUC professsor Darrel Good, spoke to a group of 50 members of the Grain and Feed Association of Illinois attending a seminar on the economics of ethanol held in Effingham, IL Aug. 13.

Hauser said there are five factors that determine the future viability of the dry mill ethanol industry.

• Subsidies. The level of federal subsidies will be a significant factor in the level of ethanol production. • RFS. The renewable fuels standard must be maintained.

• Blends. Fuel blends could play a significant role if increased above 10% ethanol.

• Tariffs. Maintain existing policies that provide U.S. producers an even playing field.

• Cellulosic ethanol. The industry is still waiting for breakthroughs in this area.

Grainnet, August 15, 2007