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Response to wercal (Reply #49)

Mon Sep 23, 2013, 07:09 PM

76. Ethanol brings down the price of gas ~20% - Merrill Lynch - more than makes up for E85 price LOL

http://www.democraticunderground.com/?com=view_post&forum=1127&pid=54406

Ethanol lowered the price of gas (according to Merril Lynch) at least 20%.

http://ethanolrfa.org/page/-/rfa-association-site/studies/MerrilLynchJune2008.pdf?nocdn=1



"On our estimates, retail gasoline prices would be at least $21/bbl higher on average without the incremental biofuel supplies. In particular, the surging ethanol output has contributed to temper prices in the Midwest (by $32/bbl) and in the East Coast (by $24/bbl) due to the greater availability of ethanol and the lower price elasticity of demand in these regions."


Since Oil was trading at around $110.00 in April of 2008 (rising from $103 at the beginning of April to $114 in the third week of April) (allowing at least six weeks of lead time to write and print the World Energy Weekly) that would mean Merrill Lynch was estimating that Ethanol was lowering the price of oil, on average, about 19%. In the Midwest that percentage would be 29% while on the East Coast it would be about 22% by Merrill Lynch's estimate.

[font size="3"] we currently make a good deal more ethanol than we did in 2008, so the above estimate can be considered conservative.

on an annual basis that's about 134,000,000,000 gallons of gas at $3.60 for roughly, [font size="4"]$97,800,000,000....SAVED[/font] on all gasoline .

Or another way to put it: since ethanol brought the price of gas down at least 20% then the price, without ethanol supplying about 8% of the fuel supply, would have been $3.60(1/(1-.2)) = $4.50, giving us a savings per gallon of $.90.

Kindof makes the price of E85 seem like chicken shit doesn't it?[/font]



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