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More corn ethanol could mean higher gas prices

Posted Apr. 18, 2012 / Posted by: Michal Rosenoer

Washington is beautiful in the Spring:  the cherry trees are in full bloom, children flock to the White House lawn for a century-long tradition of rolling eggs on Easter Monday, and hundreds of office workers breakout their well-worn leather mitts for another season of softball.  However, spring in Washington also raises the annual “how high will gas prices be at the pump this summer?” specter.  As usual, this year Congress has fallen into a discordant jamboree with each side touting their idea as the solution, and condemning the other’s proposal as an assault on the average American’s wallet.

The Renewable Fuels Association and their Congressional backers have pushed for a 50 percent increase in the amount of ethanol that can be blended into our national gasoline supply to offset rising gasoline prices. Under their analysis, a gallon of ethanol costs less than a gallon of gasoline, therefore more ethanol blended into the gas you purchase at the pump means overall cheaper fuel.  Yet, the corn ethanol industry and their lobbyists have failed to account for a big problem: fuel efficiency.  A gallon of ethanol is less than 70% as efficient as a gallon of pure gasoline, so the more  ethanol there is blended into your gasoline, the less mpg you’ll get, and the more likely you will be on a first-name basis with your gas station attendant.

Based on information from Trading Economics, the average trading price for a gallon of ethanol for 2011 was $2.72. The average trading price for a gallon of gasoline during  2011 was $3.02. A cursory analysis would support the argument that ethanol is cheaper, and thus, more of it would make pump prices cheaper. However, once efficiency is accounted for, the result is dramatically different.  Ethanol has only 68.2% as much energy content as pure gasoline, meaning that on a gallon of pure ethanol, a vehicle could only travel two-thirds the distance than on a gallon of pure gasoline.

Dividing the price of ethanol per gallon by the efficiency ratio ($2.72/0.682) equals $3.98. So, at a mpg-adjusted price, ethanol actually costs $3.98 per gallon, compared to $3.02 for gasoline, making ethanol about $0.96 per gallon more expensive than gas in 2011:

Price of ethanol per gallon /efficiency of ethanol compared to gas = ($2.72/0.682)

($2.72/0.682) = $3.98

$3.98 = mpg-adjusted price of ethanol per gallon

Price of mpg-adjusted ethanol per gallon – price of gas per gallon = ($3.98-$3.02)

($3.98-$3.02) = $.096

$0.96 = additional cost of fuel, per gallon, to use ethanol instead of gasoline

This is also true for the past month, when gas prices have been their highest in a long time. During the month of March, the trading price for a gallon of ethanol was $2.30. The average trading price for a gallon of gasoline in March was $3.33. Using the same calculation, the price of ethanol divided by the efficiency ratio ($2.30/0.682) equals $3.37 – making $3.37 the price of a gallon of ethanol for March 2011, compared with $3.33 per gallon for gas. Ethanol is not a cheaper substitute, and not the solution to rising gas prices or a cleaner energy future.

The math clearly shows that when adjusted for energy efficiency, ethanol is actually more expensive than gasoline. Using ethanol as engine fuel, as the corn ethanol lobby would have us do, could waste consumers’ money and increase gas prices. Unfortunately, ethanol isn’t just expensive – it’s also damaging the environment and increasing hunger rates worldwide. Corn ethanol – America’s only commercial source of ethanol – is causing devastating increases in pesticide and chemical runoffs from farms, which is increasing water pollution in drinking water and in the Gulf of Mexico. The production and use of corn ethanol is also increasing air pollution, soil erosion, and actually leads to more greenhouse gas emissions than regular gasoline use. Additionally, because America diverts over 40% of our corn to fuel instead of food, food prices domestically and abroad have been shooting up for years, driving millions of people into poverty and hunger. Read more about the dangers of corn ethanol in our fact sheet – The Trouble with Corn Ethanol­.

Americans have overcome adversity before, both external and internal, through problem-solving; finding a solution for a reliable and truly sustainable source of energy will be no different. Gasoline is a dirty fuel, but replacing it with other dirty fuels like corn ethanol is not the answer. We need to continue to improve the efficiency of our vehicle fleet, transition towards vehicles that use cleaner energy the electricity, and develop public transportation alternatives to driving. Transitioning off of oil and onto other dirty fuels will only cause more hardship in the future – both for the environment and consumers.

The trouble with corn ethanol (Factsheet)

An explanation of the negative environmental, social, and economic effects of using corn ethanol

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