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Ethanol Supporters Say Biofuel Keeps Pump Prices Low

A new study claims that ethanol blended into gasoline lowers the average price of gasoline by 89 cents.
May 27, 2011

BLOOMINGTON, Ill. - Ethanol proponents claim that the biofuel reduces the cost of gasoline, the Bloomington Pantagraph reports. A new study partly funded by the Renewable Fuels Association (RFA) discovered that U.S. wholesale gas prices per gallon registered 89 cents lower last year because ethanol production jumped.

The Midwest, with its high biofuel production, saw a savings of $1.37 per gallon. The Center for Agricultural and Rural Development at Iowa State University conducted the study, which has been praised by the Illinois Farm Bureau and RFA, especially since gasoline prices are staying high.

However, a competing study from the Energy Policy Research Foundation said that skyrocketing corn prices will contribute to increases in gasoline prices. That report claimed the "true price" of ethanol is really more when it��s converted into "gasoline energy equivalent basis."

E10 does stop shortages in supplies and also stabilizes gas prices, said Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association and Illinois Association of Convenience Stores. Stations stock E10 because of its competitive price and the 20 percent state sales tax incentive.

"You're never gonna see gas down to 90 cents a gallon again, but (ethanol) will help slow the explosive growth of wholesale gasoline" costs, he said.