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Iowa Ag Review

Abstract

U.S. consumers are on track to consume 138 billion gallons of gasoline in 2008 (down from 142 billion gallons in 2007) and approximately 9 billion gallons of U.S.-produced ethanol plus perhaps another 800 million gallons of imported ethanol. Fuel blenders have a strong incentive to use all this ethanol because they receive a 51¢-per-gallon subsidy (the blenders tax credit) from taxpayers. In addition, since February of this year, the price of ethanol has been less than the price of gasoline. U.S. Environmental Protection Agency (EPA) regulations allow blended fuel to contain up to 10 percent ethanol. California regulations allow up to 5.7 percent blends.

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