The Renewable Fuels Association is claiming that ten percent ethanol blends reduce pump prices by $0.15 a gallon. That claim seems rather dubious given that E85 pump prices are generally pretty close to gas prices. Until we move beyond corn ethanol, the economic benefits will be minimal at best. There may be some benefits in terms of increased oxygen content and octane levels, but it's questionable for a trade group to make such claims about saving money. Their press release is after the jump.
[Source: Renewable Fuels Association, thanks to Steve for the tip]
Thanksgiving Travel, Turkey More Expensive This Year
Oil, Gasoline Prices Leaving Less for Consumers Heading into Holiday Season
November 20, 2007
Washington – Americans will take a hit in their wallet as well as their waistlines this Thanksgiving holiday. The run up in oil prices over the past year is forcing fuel prices as well as food prices ever higher.
An analysis by John Urbanchuk, a director at the economic consulting firm LECG, LLC, released today estimates that Americans will fork over $520 million more this year than last year on their Thanksgiving travel. That means, based on the national gas price average of $3.11, an increase of 39 percent over 2006 just to drive over the river and through the woods to Grandma's house. That is $520 million that won't be spent on Black Friday, the traditional kick-off to the holiday shopping season. More specifically, it will cost the average family an extra $17 for roundtrip travel for Thanksgiving dinner.
"Soaring oil prices are hitting average Americans where it hurts the most: the pocket book," said Urbanchuk. "High oil and gasoline prices will cost Americans more than half a billion dollars in travel this Thanksgiving holiday. That is money that won't be spent at Wal-Mart or online as the holiday shopping season begins in earnest."
In addition to the high prices at the pump, Americans will also get pinched at the dinner table. The wholesale price of turkey, the staple of any Thanksgiving meal, is down four percent over last year. However, retail prices for turkeys in the grocery aisle are up 12 percent, a reflection of the impact soaring oil and fuel costs are having on food items across the board. In fact, a recent analysis by the American Farm Bureau Federation of the cost of the average Thanksgiving dinner for 10 this year showed an increase of 11 percent over 2006.
The news for all Americans isn't so grim. Where gasoline marketers are blending ethanol, drivers are realizing a savings at the pump. Today, ethanol is blended in roughly half of the nation's gasoline. Given the current economics of ethanol and gasoline, the increasing availability of ethanol is helping keep gasoline prices up to $0.15 lower than they otherwise might be.
"Americans are literally over a barrel this holiday season as oil prices are likely to remain high and gasoline will no doubt follow suit," said Bob Dinneen, president of the Renewable Fuels Association. "Were it not for the growing availability of ethanol, Americans would be spending a whole lot more to go over the river and through the woods this holiday season."
Key findings of the analysis include:
• At today's prices, Americans will spend more than $1.8 billion on gasoline over the Thanksgiving holiday, nearly $520 million, or 39 percent, more than Thanksgiving 2006. That is $520 million that cannot be spent on the Friday after Thanksgiving, the traditional kick-off to the holiday shopping season.
• With the national average retail price of regular gasoline topping $3.11 per gallon, the average traveling family will spend $16.80, or 39 percent, more on gasoline to travel to Grandma's house for Thanksgiving dinner this year than last.
• Without ethanol blended at ten percent with gasoline (E10), the average pump price of gasoline would be as much as $0.15 per gallon, or 4.7 percent higher than current levels and the average American household would pay $19.68 more than last year for the Thanksgiving trip.
A complete copy of the analysis can found at www.ethanolrfa.org.