Domestic Ethanol an Overall Benefit for the Family Budget, According to New Merrill Lynch Report

GrainNet.com
Date Posted: Jun. 13, 2008

Washington—According to a new analysis by Merrill Lynch Commodity Strategist Francisco Blanch, “retail gasoline prices would be $21/bbl higher, on average, without the incremental biofuel supply.” This translates to a $526 a year savings on gasoline for the average family (1).

Blanch also calculates that U.S. ethanol production has increased corn prices by just 21% since 2004. Because a very small portion of the price of corn is passed through to retail food items, this means ethanol has increased household spending on retail food items by just $15 per year.

According to a wide range of experts, skyrocketing oil prices, increased global demand for meat and grains from China and elsewhere, commodity speculators, the declining value of the dollar and droughts and bad weather account for approximately 80 percent of corn costs.

“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,” said Bob Dinneen, President of the Renewable Fuels Association.

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