Analysis Credits Ethanol With Lower Gas Prices

Cindy Zimmerman

Gas prices have hit an eight-month low and an analysis in the Washington Post today gives part of the credit to ethanol.

The main reason they say gas prices have declined is weak demand due to the economy and continued high unemployment. That comes from an American Petroleum Institute (API) news release last week, which reported gasoline demand for July, as measured by deliveries, was down .03 percent compared to the same time last year. “With unemployment high and July regular gasoline prices more than 20 cents a gallon above those a year ago, consumers likely have been shopping and vacationing less and trimmed their gasoline purchases accordingly,” said API Chief Economist John Felmy.

But, the Washington Post article notes that fuel efficiency improvements and more ethanol have also helped to moderate gas prices. “A steady increase in the biofuels component of U.S. motor fuel is another reason; the four week average for ethanol production ending Aug. 13 was 854,000 barrels a day, up nearly 18 percent from a year ago and now more than 9 percent of the volume of motor fuel, according to the Renewable Fuels Association.”

Gasoline prices have dropped a little more this month, according to the American Automobile Association, which reports this week that average retail price for regular gasoline is less than $2.71 a gallon, now just eight cents higher than a year ago.

Ethanol, Ethanol News, Oil, RFA