US-produced biofuel cutting wholesale gasoline prices significantly

Domestically-produced ethanol biofuel in America cut wholesale gasoline prices by an average of $1.09 per gallon, according to recent research.

Economics professors at the University of Wisconsin and Iowa State University in America conducted the research that found using domestically produced biofuel was significantly cutting prices at the pump. The biofuel analysis showed a $0.20 per gallon greater price reduction than the $0.89 per gallon impact in 2010. The findings have been documented with the Centre for Agricultural and Rural Development (CARD).

The researchers also found that gasoline prices have been reduced by an average of $0.29 per gallon, or 17 per cent, from 2000-2011 thanks to the growing use of ethanol. This is significant when placed against the rise in other fossil fuels, which has rocketed around the world in recent years.

Professor Hayes, an economist who was part of the research team, said: “Growth in US ethanol production has added significantly to the volume of fuel available in the US.
“It is as if the US oil refining industry had found a way to extract ten per cent more gasoline from a barrel of oil. This additional fuel supply has alleviated periodic gasoline shortages that had been caused by limited refinery capacity. “

Another significant change is the fact that America is now becoming regarded as more of an exporter of fuel than an importer. New infrastructure built throughout the US and new productions means that energy independence for the superpower is no longer (forgive the pun) a pipe dream.

The main reason ethanol has been able to perform so well is based on three primary factors. The first is that oil and gasoline prices are increasing considerably, which means that the search for alternative fuel sources is becoming more pressing. The second is that there is higher ethanol inclusion, and thirdly, ethanol is being priced at a larger-than-normal discount to gasoline.

Posted by Claire Manning