Headlines, Excerpts and a Few Comments

Fact Sheet: Using Homegrown Biofuels to Address Putin’s Price Hike at the Pump and Lower Costs for American Families. White House Press Release, April 12, 2022  

The President will announce today that the EPA Administrator is planning to allow E15 gasoline—gasoline that uses a 15 percent ethanol blend—to be sold this summer. This is the latest step in expanding Americans’ access to affordable fuel supply and bringing relief to Americans suffering from Putin’s Price Hike at the pump. 

E15 is currently offered at 2,300 gas stations in the country, where it can serve as an important—and more affordable—source of fuel… At current prices, E15 can save a family 10 cents per gallon of gas on average, and many stores sell E15 at an even greater discount.

Note: There are about 115,000 gas stations in the US, so the number of stations that offer E15 is 2% of the total.

3 ways ethanol brings down gas prices: A solution to high gas prices is being planted across the American Heartland. Fox Business, May 23, 2022

Not only does ethanol strengthen our fuel supply, but it also reduces the cost of each gallon of gasoline you buy at the pump. Because ethanol is less expensive per gallon than traditional gasoline, a gallon of E15 blended gas can be up to 50 to 60 cents per gallon cheaper.

With the average American purchasing 421 gallons of gas a year, this could mean savings up to $252 annually for consumers!  

Note: A gallon is a unit of volume, not a unit of energy, which brings me to…

Though Ethanol Might Appear ‘Cheaper’ Than Gasoline, Let’s Do the Math On Energy Content. Michael Lynch/Distinguished Fellow at the Energy Policy Research Foundation and President of Strategic Energy and Economic Research. Forbes, June 6, 2022.

…the price per gallon of ethanol is not better than the price of gasoline except by volume: ethanol contains about 30% less energy than gasoline and the price per gallon is thus misleading. Adjusting for this yields the figure below, which shows that ethanol in gasoline equivalent gallons is rarely cheaper than gasoline, typically 5% of the time:

Bottom Line: Ethanol is rarely cheaper than gasoline. However, the price of gas is skyrocketing and it may be that right now the E15 ethanol-gasoline blend is slightly cheaper than regular gas. But few Americans even have access to E15, given it’s available at only 2% of US gas stations. And the price advantage of E15 has to be weighed against the environmental damage wrought by the biofuel industry. For instance, growing crops for biofuels involves the destruction of wild habitat through land clearance and loss of habitat is the main driver of biodiversity loss around the world. Plus, food-based biofuels push up food prices, hitting the poorest people hardest.

Given the meager payoff for consumers and the rather large negatives of growing crops for biofuels, why does our government still subsidize biofuels and ethanol production? One word: politics. Between farmers, biofuel producers, and fuel transporters, biofuels are big business and biofuel supporters are a huge voting block. And those corn-belt states play an outsized role in presidential contests. As Iowa State University political science professor Steffen Schmidt says, “You can’t trash ethanol and expect to win in Iowa”.

Additional References:

EU plan for cutting emissions from planes could end up increasing them. By Michael Le Page/New Scientist  April 27, 2022

Lawrence, Robert Z. “How Good Politics Results in Bad Policy: The Case of Biofuel Mandates.” Discussion Paper 2010-10, Belfer Center for Science and International Affairs; CID Working Paper No. 200, Center for International Development, Cambridge, Mass: Harvard University. September 2010. https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/files/mrcbg_fwp_2010-12_Lawrence_biofuel.pdf