Analysis shows ethanol cuts gas prices by up to $1.50 per gallon

Drovers Cattlenetwork

Brett Wessler, Staff Writer  |  Updated: 09/23/2013

 

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Ethanol Discount to Gasoline Widens on Concern Imports Will Rise

Bloomberg

By Mario Parker - Jun 13, 2013 4:55 PM CT

 

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Report: Higher RINs prices aren’t the reason gas prices are up

Ethanol Producer Magazine
By Holly Jessen
March 28, 2013

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E85 loyalty

Ethanol Producer Magazine
By Holly Jessen April 11, 2012

Economist finds buyers willing to pay more

Research showing consumers are willing to pay a premium for ethanol was published in the March issue of the Journal of Environmental Economics and Management. Soren Anderson, a Michigan State University economist, calculated that when ethanol increased 10 cents per gallon above the price of gasoline, there was only a 12 to 16 percent decrease in demand.

Frankly, Anderson was surprised at what he found. “I was expecting to see a sharp reduction in sales of E85 the moment that the price rose above the price of gasoline on an energy-adjusted basis,” he tells EPM. “But this doesn’t seem to be happening. Instead, it appears that many E85 buyers are willing to pay a premium for the fuel, and some fraction of these buyers continue to buy the fuel, even when its price rises above that of gasoline.”

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Petroleum group discounts ethanol's role in gas prices

Ethanol Producer Magazine
By Kris Bevill February 27, 2012

In a Feb. 22 press call to discuss rising gas prices, the American Petroleum Institute’s chief economist, John Felmy, blamed crude oil prices for high prices at the pump, and said refinery closures and increasing exports of U.S. gas and diesel are not major factors in the spike in prices. Felmy said that, in fact, U.S. refineries produced record amounts of gasoline in 2011 and in January, due to their ability to produce more gasoline and diesel from every barrel of crude. He also noted that the use of biofuels has reduced the amount of petroleum fuels needed in the market. “We’ve had a mandate to have more biofuels in the refinery stream and so the total finished gasoline supplies have gone up as a function of all those things,” he said.

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Ethanol keeping gas prices below $4/gallon: RFA

Biofuels Digest

Jim Lane May 2, 2011

In Washington, the Renewable Fuels Association reports: “Based upon current market conditions and federal renewable fuels policy, 10 percent ethanol blends (E10) are keeping gasoline prices $0.12 per gallon cheaper than they otherwise would be. As AAA reports, the current average price for gasoline is $3.88 per gallon nationwide. Without ethanol, gas prices would average $4.00 per gallon nationally. These savings do not take into account the downward pressure ethanol puts on the oil market by virtue of being 10 percent of the nation’s gasoline supply. Previous estimates of that impact show ethanol is keeping gasoline prices up to $0.60 lower per gallon than they otherwise would be.”

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Brazilians Switch to Gas as Ethanol Prices Climb: A Dark Sign of Things to Come?

GreenTechMedia.com
Michael Kanellos October 21, 2009 at 12:40 PM

Liquid fuel is a commodity, it turns out.

Brazilian drivers in many states are switching from ethanol made from sugar cane to gas as higher sugar prices are pushing ethanol prices up, says Reuters.

When ethanol costs about 70 percent as much or more than gas, drivers switch. Ethanol only provides about two-thirds of the energy content that gas does; as a result, when it passes the 70 percent mark, it effectively becomes more expensive. In big cities like São Paolo and Rio, ethanol costs 60 percent to 67 percent of the price of gas, so drivers still pick it up. After taxes, it's still economical.

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Gas prices help put ethanol makers back on their feet

DesMoinesRegister.com
By DAN PILLER • dpiller@dmreg.com • June 13, 2009

If the 40-cents-per-gallon jump in the price of gasoline since last month has you down, at least take heart that the increase has given Iowa's ethanol industry a boost.

After a cold winter of closed plants, bankruptcies and losses, ethanol producers report that the rise in crude oil and wholesale gasoline prices has increased the demand for the corn-based biofuel and returned most plants to at least a modicum of profitability.

"We're not completely healed, but at least the bleeding has stopped," said Rick Brehm, president of Lincolnway Energy in Nevada.

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Can The Ethanol Industry Be Sustained At Current Corn & Oil Prices?

Cattlenetwork.com
2/19/2009 7:39:00 AM

The US ethanol industry is in a financial pinch. Some plants and some multi-plant companies have had some fits, and starts, and burps in the past year. Some are history and others are living on their past financial laurels. Economic factors have changed since the go-go days of 2007 and 2008 when oil prices were rocketing upward, carrying ethanol and corn on its back. With oil prices playing on both sides of the $40 mark, can ethanol remain financially viable?

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Ethanol market takes hit from low oil prices

Des Moines Register
By DAN PILLER • dpiller@dmreg.com • November 21, 2008

Oil prices have hit levels not seen in more than three years, which is good news for drivers but not ethanol producers.

Prices at the pump fell to a national average of about $2 a gallon Thursday, with the average prices in 23 states - including Iowa at $1.92 - even less than that.

The decline in the price of crude oil has taken with it the price of ethanol, which has fallen from $2.90 per gallon last July to $1.64 per gallon Thursday on the Chicago Board of Trade.

Of concern to ethanol producers is the spread between ethanol and unleaded gasoline, whose price closed at $1.04 per gallon Thursday on the New York Mercantile Exchange. Oil companies have more incentive to add the 10 percent ethanol blends to gasoline if ethanol is cheaper.

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Thinking Clearly about Oil and Alternative Fuels

Ag Web.com
Guest Blog
11/18/2008
by Bruce E. Dale, Ph. D.

Never mind the recent decline in oil prices from their record highs. The age of cheap oil is over. And it will not return. Shrinking supplies of conventional crude, rising demand from emerging markets and the shadowy presence of speculators have forever ended the days of $20 per barrel oil and $1 per gallon gasoline. If oil were "only" expensive, it would be painful but not particularly dangerous. But because remaining conventional oil supplies are increasingly located in hostile or unstable countries, our oil addiction is also a huge threat to our national security. We need to think clearly about alternatives to oil.

We are safer as a nation when oil alternatives fit easily into our existing fuel distribution and vehicle system, stretch domestic oil supplies and can be produced in large volumes at reasonable cost. We already have this in the blending of 10 percent ethanol (E10) into more than 70 percent of regular unleaded gasoline sold in this country and in 85 percent ethanol (E85) for the more than 7 million flex-fuel vehicles capable of using higher blends of ethanol on the road today.

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Booz & Company Report: U.S. Could Become Net Gasoline Exporter as Energy Demands Shift

GrainNet.com
Date Posted: August 28, 2008

New York, NY—The refining industry is grappling with shifting scenarios for tomorrow’s energy landscape—including one case in which the United States could become a net exporter of gasoline by 2010, concludes a new analysis of the refining industry by global management consulting firm Booz & Company.

The report, “Refining Trends: The Golden Age Or the Eye of The Storm? Part IV: Tough Choices,” explores rising demand for fuel in Asia and the BRIC nations (Brazil, Russia, India and China), mandates for biofuels, alternative technology vehicles, and the introduction of $2,500 automobiles.

This confluence of factors is confounding an industry that counts on 20-year predictions to guide investment decisions made today.

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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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Corn Pipe: Will Falling Ethanol Prices Mean Savings at the Pump?

The Wall Street Journal
June 4, 2008, 11:25 am
Posted by Jeffrey Ball

The Journal’s Ana Campoy reports:
For all the bad rap ethanol’s been getting from politicians and environmentalists, it’s actually helped keep gas prices from going even higher in the past few months.

Refiners have been paying an arm and a leg for crude oil—the main raw material they use to make gasoline. By blending cheaper ethanol into the mix, they make oil-based gasoline go farther. In March, refiners blended 20% more ethanol than in the same month last year, and 7% more in February, according to the latest government data.

That’s not only giving refiners a break, but consumers too.

If ethanol were out of the picture, gas would be more expensive at the pump because refiners would pass on at least part of the higher costs to the consumers.

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