As Drivers Hit the Road for Memorial Day, Ethanol is Helping to Moderate Gasoline Prices

By Expanding Domestic Supplies, Ethanol Reduces Gasoline Prices 30 Cents Per Gallon Nationwide

WASHINGTON, May 27 -- As motorists across the country gas up for Memorial Weekend travel, they are confronted with record high gasoline prices, often over $2 per gallon. Think it couldn't be any worse? Think again. According to a new analysis, motorists would be facing much higher gasoline prices, an additional 30 cents per gallon, were it not for the growing ethanol industry adding billions of gallons to U.S. fuel supplies.

"As the summer driving season begins, ethanol use is holding down gasoline prices by more than 30 cents per gallon," stated Renewable Fuels Association President Bob Dinneen. "U.S. ethanol plants have produced record amounts of ethanol over the last six months to meet the demand for gasoline. Without ethanol, our country would be even more reliant on foreign imports of gasoline, and the pain at the pump would be much more severe. And the ethanol industry isn't resting. Over the last 25 years, while no new U.S. refineries have been built and scores have been closed, 78 new ethanol plants have been built and 10 more are under construction today."

The analysis, "Ethanol and Gasoline Prices," by economist John Urbanchuk found that ethanol use adds critical supply to the U.S. gasoline market. Without ethanol, gasoline demand would further out pace domestic supply and result in a major price spike. Specifically, the report found:

  * Without ethanol, gasoline prices would increase 14.6 percent, or 30.2
    cents per gallon, in the short term (including the entire summer driving
    season).

  * Without ethanol, gasoline prices would increase 3.7 percent, or 7.6
    cents per gallon, in the long term once refiners build new capacity or
    secure alternative sources of supply.

  * Ethanol use will bolster U.S. gasoline supplies by more than 3.3 billion
    gallons in 2004.

  * More than 30% of all U.S. gasoline is blended with ethanol.

  * Without ethanol, refiners would be forced to import about 217,000
    barrels per day of high-octane, clean-burning gasoline blending
    components.

"This weekend, as Americans hit the highways, they should seek out ethanol blended fuels," continued Dinneen. "Ethanol use boosts rural economies, improves the air we breathe, and enhances our energy security. With so many of our daughters and sons stationed around the world, in part to secure our addiction to foreign oil, Memorial Day is the perfect time to purchase gasoline blended with domestically-produced ethanol."

The complete analysis can be found at: http://www.ethanolrfa.org/ethanolandgasprices.doc