Study Shows RFS Saves 22 Cents Per Gallon

Cindy Zimmerman

A new study shows the Renewable Fuel Standard (RFS) has lowered gas prices by an average of 22 cents per gallon in recent years and saved the typical American household $250 annually.

The study, by economist and energy policy expert Dr. Philip K. Verleger, Jr., used an econometric model to estimate the impacts of the RFS, which requires refiners to blend increasing amounts of renewable fuels with gasoline and diesel, on crude oil and gasoline prices over the last four years (2015-2018).

“The Renewable Fuel Standard Program: Measuring the Impact on Crude Oil and Gasoline Prices” concludes that by expanding fuel supplies by approximately 1 million barrels per day, the RFS reduced the price of crude oil by an average of $6 per barrel from 2015-2018. In turn, gas prices were reduced by an average of 22 cents per gallon, which amounts to a savings of nearly $5 every time consumers fill up. According to the study, the RFS is responsible for putting roughly $90 billion back into the pockets of U.S. consumers over the past four years, increasing discretionary income and raising the nation’s gross domestic product.

The report also found that if ethanol was entirely eliminated from the fuel supply, as some opponents of renewable fuels have advocated, gasoline prices would surge by more than $1 per gallon. According to the study, “Retail prices would today be above $4 per gallon, not $2.90, were renewable supplies removed from the supply mix.”

“If you’ve never heard of the Renewable Fuel Standard before today, this study tells you all you need to know: blending renewable fuels like ethanol into our gasoline supply saves American consumers money every time they fill up their tank,” said Geoff Cooper, President and CEO of the Renewable Fuels Association (RFA). “As we head into the summer driving season, it’s important for American consumers to recognize that the RFS is keeping prices down at the pump, while at the same time reducing harmful tailpipe pollutants, cutting greenhouse gas emissions, and moving us closer to energy independence.”

Read the study.

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