A review of the data shows that ethanol remains cheaper than gasoline thereby making ethanol-blended fuel cheaper to consumers. In fact, Renewable Fuels Association Vice President Geoff Cooper notes that a quick look at the data shows retail gasoline prices and ethanol spot prices are not well correlated. Further examination of recent pricing data reveals that gasoline prices would be higher if not for the fact ethanol is blended with nearly every gallon of gasoline consumed today in the United States.
As of last week ethanol was 15 cents cheaper per gallon than gasoline when the tax credit for ethanol is factored in. And gasoline blenders and refiners who mix ethanol with their gasoline are able to claim a 45 cent per gallon tax credit on every gallon of ethanol blended. This tax credit effectively lowers the price a blender or refiner pays for ethanol. When the value of the tax credit is passed through to the consumer, it translates to a 4.5 cents per gallon savings at the retail level for gasoline containing 10% ethanol.
Cooper notes it would be misleading if one didn't also consider the dampening impact ethanol use has on gasoline prices by being nearly 10% of the nation's gasoline supply. Cooper says the addition of nearly 13 billion gallons of ethanol to the U.S. gasoline supply is taking significant pressure off gasoline stocks, which has the effect of putting downward or moderating pressure on gas prices.
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