Do Gasoline Prices Account for Ethanol's Lower Energy Content?
Abu-Sneneh, Firas, Colin A. Carter, and Aaron Smith
U.S. law effectively mandates that retail gasoline must contain at least 10% ethanol. This artificial demand for ethanol drives up the price of corn, harming livestock operations and global food consumers. Recently, the U.S. government determined that short-term removal of the mandate would have no measurable impact on ethanol demand and, therefore, no impact on corn prices. If true, this ruling suggests motorists may be paying the same retail price for ethanol as gasoline, even though ethanol lowers fuel economy.
Gasoline blending, renewable fuel standards, biofuel, food vs. fuel
Abu-Sneneh, Firas, Colin A. Carter, and Aaron Smith. 2012. "Do Gasoline Prices Account for Ethanol's Lower Energy Content?" ARE Update 16(2): 1-4. University of California Giannini Foundation of Agricultural Economics.