RFA: Ethanol saves consumers money at the pump

By Renewable Fuels Association | May 01, 2018

The summer driving season kicks off in just a few weeks and the U.S. Energy Information Administration is already warning drivers that they are likely to see the highest gasoline prices in four years. Pump prices have already begun to increase, with the average retail price for regular gasoline reaching $2.85 per gallon last week, the highest since November 2014. However, ethanol is helping to offset higher prices, and 10 percent ethanol blends (E10) alone could save consumers at least $39 billion this year, according to an analysis released today by the Renewable Fuels Association.

The analysis of wholesale gasoline and ethanol price data shows that blending E10 has reduced wholesale gasoline prices by at least 27 cents per gallon, or 14 percent, compared to ethanol-free gasoline (E0). At current prices, E10 would save consumers $39 billion, or $306 per household, this year. The savings estimates are conservative, the analysis noted, since they exclude the additional aggregate cost savings that results from ethanol’s extension of the U.S. fuel supply and displacement of crude oil demand. The analysis points out that ethanol prices in the reference market of Omaha, Neb., have been equivalent to roughly half of the price for E0 gasoline so far this year.

The cost savings to consumers would be even greater if E15 (15 percent ethanol, 85 percent gasoline) were used in approved vehicles nationwide in place of E10, the analysis found. Specifically, the savings would be at least 34 cents per gallon, or 17 percent, for E15 consumers. Using E15 in approved vehicles would help consumers across the country save approximately $45 billion on gasoline, or $386 per household.

However, due to arcane regulatory barriers, E15 is prevented from being sold during the summer months (June 1-Sept. 15) in more than two-thirds of the nation’s gasoline market. According to the analysis, consumers who are blocked from accessing E15 are unnecessarily spending at least an extra 7 cents per gallon on gasoline. Nationally, that translates to $6 billion, or approximately $80 per household, of forgone savings.

“Gasoline prices are rising right along with the temperature. As Memorial Day approaches and the start of the summer driving season begins, consumers are expecting to pay more at the pump. But as this analysis shows, ethanol is already helping to keep gas prices in check,” said RFA President and CEO Bob Dinneen. “U.S. ethanol continues to be the lowest cost, highest octane fuel in the world, and it is clearly yielding savings to consumers. Those savings would be even more significant if EPA allowed year-round sales of E15 and other higher ethanol blends. There’s absolutely no reason why consumers should be denied access to greater fuel savings and a higher-octane option at the pump.”

To view a copy of the analysis, click here.