Washington – On Sunday the AAA told American consumers what most already knew – that the average price for regular unleaded gasoline hit a record $4 per gallon.  Even worse, some analysts are predicting that gasoline prices will hit $4.50 by the July 4th holiday – hardly the news we need to celebrate America’s independence.

Ethanol, America’s homegrown renewable fuel is reducing America’s dependence on increasingly unaffordable oil imported from the Middle East and elsewhere.  According to the Energy Information Administration, U.S. ethanol production is cutting over 140,000 barrels a day of foreign oil imports.  That’s over $6.6 billion a year that’s staying here at home and not lining the pockets of OPEC and other foreign oil producers.

Using ethanol to reduce our dependence on imported oil is already delivering benefits to American consumers.  According to experts at Merrill Lynch and elsewhere, ethanol is helping to keep gasoline prices and oil prices 15-27% lower than they otherwise would be. 

“Paying $4 or more for gasoline is devastating the budgets of millions of American families and dealing a harsh blow to our nation’s economy,” said Bob Dinneen, President of the Renewable Fuels Association.  “By producing nearly 9 billion gallons of renewable fuel, America’s ethanol producers are doing their part to reduce oil import dependence and help keep prices lower than they otherwise might be.”

According to recent analysis, the use of ethanol in America’s gasoline market is saving the average household up to $510 per year.

“Reducing oil import dependence needs to be our number one energy policy objective and expanding biofuel production from all sources of starches and plants, wood chips and municipal waste is one proven way to do it,” concluded Dinneen.

Here’s what the experts are saying:

Ethanol keeps gasoline prices down

• “If Friday's jump [in oil prices] were fully priced into retail gasoline prices, they would increase about 25 cents a gallon, [Oppenheimer & Co analyst] Fadel Gheit said. So far, that hasn't happened because low demand for gasoline, as well as a mandate for refiners to use corn-blended ethanol, has kept U.S. refining margins weak, he said.” Reuters, June 9, 2008
• Without biofuels, which can be refined to produce fuels much like the ones made from petroleum, oil prices would be even higher. Merrill Lynch commodity strategist Francisco Blanch says that oil and gasoline prices would be about 15% higher if biofuel producers weren't increasing their output.” The Wall Street Journal, March 24, 2008
• “…the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case.”  Center for Agricultural and Rural Development, Iowa State University, April, 2000

Increased biofuels production reduces US and world oil demand

• “Using current prices as a guide (West Texas Intermediate crude of $130 per barrel for the week ending May 23, 2008), without ethanol to expand the available fuel supply crude oil prices would be $35.70 per barrel higher than they are currently!” “Impact of Ethanol on World Oil Prices,” LECG, LLC, May 27, 2008.
• “Just offsetting the biodiesel and ethanol added to the U.S. and European markets since 2005 would require around 1 million barrels a day of additional crude oil supplies to be processed.” International Energy Agency, May 12, 2008
• “[In 2008] After accounting for projected increases in ethanol use, U.S. petroleum consumption is projected to fall by 330,000 bbl/d.”
• Energy Information Administration, Short-term Energy Outlook, May 6, 2008

US ethanol production reduces gasoline imports

“Bill Day, a spokesman for Valero Energy Corp., the largest U.S. oil refiner, said his company foresees ethanol growth ‘offsetting gasoline imports to the U.S.’”
Reuters, February 14, 2008.