The Impact of Ethanol Production on U.S. And Regional Gasoline Markets
Xiaodong Du () and
Dermot Hayes
Staff General Research Papers Archive from Iowa State University, Department of Economics
Abstract:
This study quantifies the impact of increasing ethanol production on wholesale/retail gasoline prices employing pooled regional time-series data from January 1995 to March 2008. We find that the growth in ethanol production kept wholesale gasoline prices $0.14/gallon lower than would otherwise have been the case. The negative impact of ethanol on retail gasoline prices is found to vary considerably across regions. The Midwest region has the biggest impact at $0.28/gallon, while the Rocky Mountain region had the smallest impact at $0.07/gallon. The results also indicate that the ethanol-induced reduction in gasoline prices comes at the expense of refiners’ profits. We find a net welfare loss of $0.5 billion from the ethanol support policies in multiple markets.
Keywords: Crack ratio; Crack spread; Substitution (search for similar items in EconPapers)
Date: 2010-05-13
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Citations: View citations in EconPapers (2)
Published in Energy Policy, August 2009, vol. 37 no. 8, pp. 3227-3234
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Journal Article: The impact of ethanol production on US and regional gasoline markets (2009) 
Working Paper: The impact of ethanol production on US and regional gasoline markets (2009) 
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:31483
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