Ethanol Saves Money at the Pump

Cindy Zimmerman

Gasoline prices are high, but ethanol is not to blame.

Renewable Fuels Association (RFA) Chief Economist Scott Richman penned an editorial this week on the RFA Blog putting the blame for high gas prices where it belongs.

Gasoline prices are high—up 50% in 2021 and rising further this year, with California prices reaching record levels—but what’s worse is that they might go even higher, given the distinct possibility of a Russian invasion of Ukraine and oil hitting $100 a barrel or more.

Given the strong tie between oil and gasoline prices, the impact of surging oil prices is evident. What is harder for drivers to see when they fill their tanks, however, is that ethanol helps hold down the price of gasoline, in two ways.

First, ethanol is usually less expensive than petroleum-based gasoline, and associated credits toward the federal Renewable Fuel Standard (known as renewable identification numbers, or RINs) also help offset the cost of gasoline. An example of these cost savings can be seen in wholesale prices of fuel sold at the Omaha rack, as reported by the Nebraska Energy Office. The data set is unique in that it includes a monthly price history for sub-octane gasoline blendstock (84 AKI) as well as regular-grade ethanol-free (E0) gasoline (87-AKI). To reach the minimum octane rating required for sale at retail (87 AKI), the 84-AKI blendstock must be blended with 10% ethanol; however, the 87-AKI E0 can be sold without such blending.

Read more on the RFA blog.

Ethanol, Ethanol News, Renewable Fuels Association, RFA