As detailed in this website, there are many benefits to producing and consuming ethanol. We benefit from the cleaner air as a result of lower greenhouse gas emissions, the jobs created by the ethanol industry and its subsequent benefits to our economy and the fact that it has reduced our dependence on foreign oil.
But ethanol has also benefited consumers by suppressing the price of gasoline. The main reason for this is that ethanol is cheaper than gasoline and since nearly all motor fuel sold today contains 10% ethanol, the price we pay a lower price at the pump.
"IN 2011, ETHANOL SUPPRESSED THE PRICE OF GASOLINE BY $1.09 GALLON ON AVERAGE." Source: CARD
A 2012 study by Iowa State University’s Center for Agriculture and Rural Development (CARD) found that ethanol suppressed gasoline prices by an average of $1.09 per gallon in 2011.
In the Midwest in particular, the study found gasoline prices were down by an average of $1.69 per gallon that year. The cheaper gasoline prices in the Midwest, the study said, was due to the fact that ethanol penetration in this region is the highest (all the top ethanol producing states are in the Midwest). The study can be found here.
According to data from the U.S. Energy Information Administration (EIA), 134.13 billion gallons of motor gasoline was consumed 2011. At a national savings average of $1.09 per gallon, Americans saved $146.2 billion that would have otherwise been spent at the pump in 2011.
Besides suppressing the price of gasoline at the pump, ethanol has also helped keep global crude oil prices in check.
Economist and energy specialist, Philip K Verleger, who served in the Ford and Carter administrations, said ethanol supply played a crucial role in supplanting some of the volume that wasn’t being produced by conflict-ridden countries such as Libya, Nigeria and Sudan.
Apart from the above, consumers who use fuels with higher blends of ethanol pay less than the price of regular E10. For example, E15 is priced between 10 and 15 cents cheaper than regular fuel while E85 is priced between 80 cents and a dollar less.
Last but not least, it’s important to note is the potential economic activity spurred by the savings consumers make when they don’t have to spend too much on fuel.