Analysis: Ethanol Cuts Gas Prices by $.50-1.00

John Davis

verlegerA new analysis shows that, thanks to ethanol, we’re paying $0.50-1.50 per gallon less for gasoline. The Renewable Fuels Association provided a short summary of the analysis by renowned energy economist Philip K. Verleger, former energy advisor to Presidents Ford and Carter.

“The implication for world consumers is clear… [T]he US renewable fuels program has cut annual consumer expenditures in 2013 between $700 billion and $2.6 trillion,” writes Verleger in a short commentary available on “This translates to consumers paying between $0.50 and $1.50 per gallon less for gasoline.” The commentary summarizes a more detailed analysis that was included in Verleger’s August Petroleum Economics Monthly newsletter.

Crude oil prices would be between $15-$40 per barrel higher today without the substantial volumes of ethanol that have been added to petroleum inventories since enactment of the RFS. According to the commentary, the RFS today has added “…the equivalent of Ecuador’s crude oil output to the world market at a time of extreme tightness.”

The analysis credits in large part the Renewable Fuels Standard (RFS) that has helped keep higher commercial crude oil inventories, and thus, prices lower.

Ethanol, Ethanol News, RFA