Ethanol impact re: gas pricing

Discussion in 'The BS Topic' started by Rick WI, May 12, 2011.

  1. Rick WI

    Rick WI Veteran Member

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    Just passing on some info



    The Impact of Ethanol Production on US and Regional Gasoline Markets: An Update to May 2009
    Xiaodong Du, Dermot J. Hayes
    Iowa State University, Center for Agricultural and Rural Development (CARD) April 2011 [11-WP 523]

    ABSTRACT
    This report updates the findings in Du and Hayes 2009 by extending the data to December 2010 and concludes that over the sample period from January 2000 to December 2010, the growth in ethanol production reduced wholesale gasoline prices by $0.25 per gallon on average. The Midwest region experienced the biggest impact, with a $0.39/gallon reduction, while the East Coast had the smallest impact at $0.16/gallon. Based on the data of 2010 only, the marginal impacts on gasoline prices are found to be substantially higher given the much higher ethanol production and crude oil prices. The average effect increases to $0.89/gallon and the regional impact ranges from $0.58/gallon in the East Coast to $1.37/gallon in the Midwest. In addition, we report on a related analysis that asks what would happen to US gasoline prices if ethanol production came to an immediate halt. Under a very wide range of parameters, the estimated gasoline price increase would be of historic proportions, ranging from 41% to 92%.
    Full Text 229 kB, 11 pages
     
    Last edited: May 12, 2011
  2. Aceshigh

    Aceshigh Veteran Member Lifetime Gold Member

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    Yeah, I'm not quite buying that at all.....

    Says 90% of the US Made gasoline in 2010 was blended with Ethanol.....
    But I think it's average is 10% in fuel these days.

    Seems to me we need to lift the moratorium on domestic drilling again
    to combat these speculations like 2008 again.
     
    Last edited: May 12, 2011
  3. Rick WI

    Rick WI Veteran Member

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    I don't know about the range but if you increase demand by 10% (the offset of ethanol input) traders would have a field day in the pit. Flip side, corn futures would take a dive.
     
  4. Aceshigh

    Aceshigh Veteran Member Lifetime Gold Member

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    I can see that happening......but we could combat it with a lift on the moratorium if it's in place again.
    Personally I think we subsidize Ethanol with Taxpayer money far too much.
    It's damn near nationalized , but private industries earn profits on our investment.

    I read a CATO report 6 years ago for college on the Ethanol corporate welfare case against Archer Daniels.

    http://www.cato.org/pubs/pas/pa-241.html
     
  5. Rick WI

    Rick WI Veteran Member

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    Just to clarify, we subsidize the blenders, not the ethanol producers. The blenders should have a requirement to pass that credit along at the e85 level versus upcharging with margins in the $0.80 range. Blenders/stations price the E85 at market versus cost plus. At market being just at, just below or just above the break even point versus regular gas. That's where the screw job takes place in the industry relative to the consumer.
     
  6. Rick WI

    Rick WI Veteran Member

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    It means 90 percent of the gasoline feed stock is blended with ethanol as some point in the supply chain. it is not saying gasoline is blended to a ratio of 90% ethanol.
     
  7. Rick WI

    Rick WI Veteran Member

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    As an FYI, we subsidize bio diesel to the tune of $2.20 to $2.40 per gallon.
     
  8. hhott71

    hhott71 R.I.P 11/19/18 Lifetime Gold Member

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    Taxpayers have no business subsidizing ANYTHING.

    If milk, gas, food goes up some, so what.
    The taxes you pay that CONgress passes around to buy votes, campaign cash etc would be cut by well over 130% of what the subsidies are.

    You pay $130 in tax to subsidize farms. CONgress sends along $100 which in most cases is used to HARM your interests with maybe $50 going to lower food costs.

    You'll be $80 ahead by eliminating the cash cow of the elected elite!
     
  9. Lowend

    Lowend Administrator. .a car, a man, a maraca. Staff Member Lifetime Gold Member

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    I agree - we should not be subsidizing Farms, Oil Production, or really any big business on a regular basis

    The Canadians have the oil in Alberta - they are buidling a pipeline. Now here's the stupid part. We want to build a massive oil pipeline from The US Canada border to the Gulf of Mexico for refining. A pipeline that long is bound to have problems (BTW This didn't make the news for some reason) so the Feds are standing in the way.
    What we really need to do is build refineries on the Northern Border (Montana?) rather than move oil 3/4 the way across the continent
     
  10. vfw_1168

    vfw_1168 Veteran Member Lifetime Gold Member

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    yep build more refineries and drill here ... that would create jobs here and lower the pump prices as well..... and to boot you will be making jobs in america for american people
     

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