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As the price of oil hit $110 per barrel and regular gas prices in Grand Island averaged $3.25 per gallon Thursday, ethanol was providing motorists some relief.
With as much as a 7- to 10-cent-per-gallon difference between gasoline with 10 percent ethanol and regular unleaded, more Nebraskans are turning to ethanol to ease the higher cost of gasoline.
According to the Nebraska Ethanol Board, ethanol sales in Nebraska hit a record high in December as 77 percent of gasoline sold contained ethanol.
"Right now, the price of gasoline is driving up the cost of everything. Ethanol offers battered wallets relief at the pump," said Todd Sneller, Nebraska Ethanol Board administrator.
Ethanol is not only helping to lower prices at the pump but also cutting back on the amount of foreign crude oil this country imports.
According to the latest short-term energy outlook from the U.S. Energy Information Administration, ethanol will reduce U.S. petroleum demand by 130,000 barrels per day in 2008.
"The slowing economy, combined with high petroleum prices, is expected to constrain growth in U.S. consumption of liquid fuels and other petroleum products to just 40,000 barrels per day in 2008," the EIA reported. "After accounting for increased ethanol use, U.S. petroleum consumption falls by 90,000 barrels per day."
According to the Renewable Fuels Now Coalition, with the price of oil hovering at $110 per barrel, that's a difference of $10 million per day nearly $300 million per month or more than $3.5 billion a year that the United States is investing at home instead of sending overseas.
Nebraska AAA reported on Thursday that regular gas prices in Grand Island were averaging $3.25 per gallon.
Although Americans are feeling the pinch of those high gasoline prices, the fuel could cost as much as 5 to 10 cents more a gallon if it was not routinely blended with ethanol, said Terry Francl, senior economist for the American Farm Bureau Federation.
Francl spoke this week at the National 25x'25 Renewable Energy Summit in Omaha.
He said U.S. consumers and taxpayers benefit from $7 billion to $14 billion in lower gasoline costs as a result of increased ethanol use.
"The overall gains to the economy from ethanol will more than offset any incremental food price increases associated with the production of biofuels," Francl said.
The U.S. ethanol industry produced a record amount of fuel ethanol in 2007, according to the Energy Information Administration. EIA said ethanol production in the United States was up 32 percent from 2006. The Renewable Fuels Association said ethanol production is expected to grow another 4 billion gallons this year.
"There are so many benefits to producing and using corn ethanol, whether it is greenhouse gas reduction, energy security or important co-products such as distillers grains," said Steve Ruh, chairman of the National Corn Growers Association's ethanol committee.
According to EIA, U.S. ethanol production in December averaged 423,000 barrels per day, for a total of 6.48 billion gallons for the year. That was an increase of 108,000 barrels per day over 2006.
The EIA also reported that ethanol demand averaged 446,000 barrels per day in 2007, or 6.84 billion gallons of demand for the year. That is an increase of more than 1.5 billion gallons over 2006 demand.
Nationwide, current ethanol plant capacity is 7.88 billion gallons, with another 5.54 billion gallons of capacity under construction, according to the National Corn Growers Association. The completion of these projects would bring ethanol production capacity to nearly 13.5 billion gallons.
"The nearly 8 billion gallons of ethanol being produced on an annual basis today is a vital component of our nation's gasoline supply, adding volume and helping to mitigate the price increases that will occur as oil continues its meteoric rise," said Bob Dinneen, president of the Renewable Fuels Association.
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