We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Ethanol Production and Gasoline Prices: A Spurious Correlation.
- Authors
Knittel, Christopher R.; Smith, Aaron
- Abstract
Ethanol made from com comprises 10% of U.S. gasoline, up from 3% in 2003. This dramatic increase was spurred by recent policy initiatives such as the Renewable Fuel Standard and state-level blend mandates and supported by direct subsidies such as the Volumetric Ethanol Excise Tax Credit. Some proponents of ethanol have argued that ethanol production greatly lowers gasoline prices, with one industry group claiming it reduced gasoline prices by 89 cents in 2010 and $1.09 in 2011. The 2010 figure has been cited in numerous speeches by Secretary of Agriculture Thomas Vilsack. We show that these estimates were generated by implausible economic assumptions and spurious statistical correlations. To support this last point, we use the same statistical models and find that ethanol production "decreases" natural gas prices, but "increases" unemployment in both the U.S. and Europe. We even show that ethanol production "increases" the ages of our children. Overall, we see no compelling reason to believe that the effect of ethanol use on gasoline prices has been more than $0.10 per gallon.
- Subjects
EUROPE; UNITED States; ETHANOL; ENERGY industries; NATURAL gas prices; GAS prices; UNEMPLOYMENT; INTERNATIONAL trade
- Publication
Energy Journal, 2015, Vol 36, Issue 1, p73
- ISSN
0195-6574
- Publication type
Article
- DOI
10.5547/01956574.36.1.4