Without ethanol, gasoline prices would be up to 40 cents a gallon higher according to numerous recent studies. For that reason alone, the South Dakota Corn Growers Association (SDCGA) questions why Texas Gov. Rick Perry would initiate higher transportation costs by requesting a waiver from the Renewable Fuels Standard (RFS).
“At a time when our country is searching for solutions to reducing energy costs – and ethanol is one of those solutions – it’s astounding why a state like Texas would make a move which would result in steeply higher fuel prices for the nation’s motorists,” said Bill Chase, president of the SDCGA.
A study released this week by the Center for Agriculture and Rural Development at Iowa State University found that, “the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case.”
For Texas drivers, who paid an average of $3.41 per gallon of regular unleaded gasoline last week, this means gas prices in the range of $3.70 to $3.80 per gallon.
In fact, a recent study by Texas A&M University—requested by Gov. Perry’s office—found that, “Relaxing the RFS does not result in significantly lower corn prices.”
The Texas A&M study also found that “corn prices have had little to do with rising food costs.” This finding is corroborated by recent studies by the U.S. Department of Agriculture’s Economic Research Service, Kansas City Federal Reserve, and other third parties.
“Studies have proven over and over that energy costs impact consumer prices by a factor of two to one,” said Chase. “A request for an RFS waiver is completely unwarranted, would result in higher gasoline prices and therefore food prices would likely increase. The SDCGA strongly opposes this waiver request and urges the EPA to deny it quickly.”