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Drinking and driving do mix ... in your gas tank

May 30, 2012 - Rob Weaver
Don’t get me wrong. Drinking and driving don’t mix well for drivers. But, according to an Ohio corn growers association, booze and gasoline are a good deal for your automobile.

A news release arrived via email this week from Ohio Corn & Wheat Growers Association that began as follows:

“Ethanol saves Ohio motorists $1.09/gallon; Study reveals ethanol’s impact to economy

DELAWARE, Ohio — Ohio corn growers have contributed to the cost savings of state motorists — Ethanol reduced gas prices $1.09 per gallon in 2011, according to a study published by the Center for Agricultural and Rural Development, proving that corn-derived ethanol plays a significant role in keeping retail gasoline prices less costly for consumers.”

I wondered about the accuracy of the claim. Could the push to add grain alcohol to gasoline really be making gasoline cheaper? So I downloaded the study by Dermot J. Hayes and Xiaodong Du, “The Impact of Ethanol Production on U.S. and Regional Gasoline Markets: An Update to 2012.”

Parts of the study (http://www.card.iastate.edu/publications/synopsis.aspx?id=1166) read like a script for “The Big Bang Theory” or a feature article about the dark matter detecting facility opening this week in South Dakota. But a paragraph I did understand sounded interesting:

“The surge in ethanol production in recent years has essentially added 10% to the volume of fuel available for gasoline powered cars and in so doing it has allowed the US to switch from being a major importer of finished gasoline to a major exporter of both gasoline and ethanol. Countries that switch trade patterns in this way will see dramatic price impacts because internal prices switch from world prices plus transportation costs to world prices minus transportation costs. In the early period, the US gasoline price had to be equal to the EU gasoline price plus the costs of transporting the gasoline from the EU to the US. Now that ethanol has allowed the US to reverse this trade pattern, US prices are lower than EU gasoline prices by an amount equal to transportation costs. In this context a $1.09 per gallon marginal impact for 2011 seems reasonable.”

I wonder whether that 10-percent volume tipping point, which reportedly allows the U.S. to export gasoline, and the switch to newer cars that supposedly can handle gasoline blends with 10 percent ethanol was a coincidence or done by design. My guess is the former.

Anyway, the study indicates the $1.09 per gallon savings cited for Ohio drivers in the news release is inaccurate; the update claims Midwestern drivers save $1.69 a gallon.

The study does note gasoline containing 10 percent ethyl alcohol lowers fuel economy by 2-3 percent. For a vehicle getting 27 miles per gallon of pure ancient algae juice, that dings the cost savings by about a dime at today’s price.

The corn growers’ group credits ethanol with the following advantages:

• Ethanol is cheaper than gasoline.

• Ethanol displaced nearly 500 million barrels of imported crude oil.

• Ethanol provides gasoline marketers with a cost-effective source of domestic energy.

• Ethanol production and use decreases emissions of greenhouse gases from motor vehicles.

• Ethanol is renewable and helps to establish a sustainable-energy future.

• Ethanol supports tens of thousands of jobs that can’t be outsourced.

So, while drinking and driving don’t mix, gasoline and alcohol mix well, at least according to corn growers.

 
 

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