Switching to Ethanol Will Reduce, Not Raise, Gasoline Prices

“Gas Prices to Rocket, Scientists Predict� [July 25] quoted a report that seemed to suggest switching to ethanol will have a detrimental impact on California gasoline supplies and prices. Both these conclusions are in error. In fact, using ethanol will expand California gasoline supplies and lower prices.

One concern raised by the report was that only half as much ethanol compared with [fuel additive] MTBE will be used to meet the oxygen standard, thereby cutting gasoline supplies. What this claim fails to take into consideration is that, with a pending MTBE ban, using ethanol will actually reduce the volume loss of removing MTBE from gasoline.

Currently, MTBE makes up 11% of each gallon of gasoline. Without ethanol, the entire 11% will be gone. With ethanol, the reduction in gasoline volume is only half. Therefore, using ethanol will expand MTBE-free gasoline supplies and help lower prices.

The second error was the prediction that ethanol supplies will fall short of demand. In fact, the California Energy Commission recently released a report determining that an additional 2 billion gallons of ethanol capacity (4 billion total) is planned to be on line for 2003. California will require only 600 million gallons. Expansions and new plants already under construction will supply more than enough ethanol to meet California’s needs.

When California switches to the cleaner MTBE-free, Phase III gasoline on Jan. 1, 2003, there will be supply and price implications. The good news is that ethanol helps on all fronts. Using ethanol is the most effective option for expanding gasoline supplies, maintaining air quality, protecting drinking water and lowering consumer costs.

Bob Dinneen

President

Renewable Fuels Assn.

Washington