Another Study Debunks RFA/Vilsack Claim Ethanol Reduced Gas Prices by $1.09/Gal

by Marlo Lewis on September 17, 2012

in Features

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A new study by the Energy Research Policy Foundation, Inc. (EPRINC) further debunks the popular talking point of USDA Secretary Tom Vilsack and the Renewable Fuel Association (RFA) that ethanol reduced gasoline prices by $0.89/gal in 2010 and $1.09/gal in 2011.

As noted previously on this site (here and here), Vilsack and the RFA tout a study by Iowa State University’s Center for Agricultural Research and Development (CARD), which concluded that if ethanol production had remained at year 2000 levels, the U.S. motor fuel supply would have been billions of gallons smaller and, thus, significantly pricier in 2010 and 2011. Subsequent studies by FarmEcon, LLC and MIT/UC Davis spotlighted CARD’s unrealistic assumption that the refining industry would not have increased gasoline production to meet consumer demand in the absence of policies mandating and subsidizing the blending and sale of increasing quantities of ethanol as motor fuel.

The EPRINC study (Ethanol’s Lost Promise: An Assessment of the Economic Consequences of the Renewable Fuel Mandate) shows, in addition, that if ethanol output had remained constant at the year 2000 level, refiners could have made up for the shortfall without importing or even refining “a single additional barrel of crude oil.” The Renewable Fuel Standard (RFS) has increased ethanol production by about 400,000 barrels per day (bbl/d) since 2000. A “remarkably small operational adjustment” in refineries’ product mix — a 1.8% increase in gasoline production — could have covered an ethanol shortfall of 400,000 bbl/d in 2011.

   

Figure Explanation: The figure shows how much additional gasoline would be produced if yields were 1, 2 or 3 percentage points higher, given actual crude oil runs through U.S. refineries for the given year. The orange dotted line shows the increase in gasoline production if yields were raised by 2.3 percentage points – this is the range in which gasoline yields moved during 2000 to 2011. Finally, the red and bluelines are the amount of ethanol that would be missing from the market if ethanol blending was capped at 400,000 bbl/d. The chart demonstrates that a 400,000 bbl/d ethanol shortfall could have been covered in 2011 had gasoline yields been just 1.8 percentage points higher, from 45% to 46.8%. A 46.8% gasoline yield is equal to or lower than the gasoline yield during 3 of the past 11 years. It is also well under the 2.3 percentage point range in which yields bounced during 2000 – 2011.

 

 

BobRGeologist September 17, 2012 at 9:28 pm

The minute advantage of mixing ethanol with gasoline is hard to justify when it is distilled from a food crop such as corn. It vanishes when you find the necessity for doing it is just more phony- baloney from the warped, science deprived minds of these would be saviors of our planet, the religion of environmentalism. I believe this waste of food becomes criminal when you consider the teeming millions of third world countries that are deprived of enough food to live on.

R. White September 18, 2012 at 3:29 pm

The CARD study in question was peer-reviewed and published. Has this study managed either?

For those that might want to see, here are the responses by the folks at CARD on the attacks of their study by MIT. It will also serve well for this latest attempt to denounce their efforts above:

First response: http://www.card.iastate.edu/publications/synopsis.aspx?id=1171
Second response: http://www.card.iastate.edu/publications/synopsis.aspx?id=1174

R. White September 18, 2012 at 4:34 pm

I wonder if they will print this one. RFA responds: http://bit.ly/Uln6y8

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