Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

a. Cost without Ethanol Subsidies
Table VII.C.5.a-1 summarizes the costs without ethanol subsidies for each of the
four control cases, including the cost for each aspect of the fuels changes, and the
aggregated total and the per-gallon costs for all the fuel changes. 79 This estimate of costs
reflects the changes in gasoline that are occurring with the expanded use of ethanol,
including the corresponding removal of MTBE. These costs include the labor, utility and
other operating costs, fixed costs and the capital costs for all the fuel changes expected.
We excluded federal and state ethanol consumption subsidies which avoids the transfer
payments caused by these subsidies that would hide a portion of the program’s costs.
Table VII.C.5.a - 1
Estimated Cost without Ethanol Consumption Subsidies ($47/bbl crude)
(million dollars, except where noted)
7.2 Bil Gals 7.2 Bil Gals 9.6 Bil Gals 9.6 Bil Gals
Max RFG Min RFG Max RFG Min RFG
Adding Ethanol 3,769 3,837 6,852 6,897
RFG RVP Cost 72 -74 72 -74
Eliminating
MTBE
-2,821 -2,821 -2,821 -2,821
Adding
2,520 2,520 2,521 2,521
Alkylate
Butane
Removed in
Winter
Changing
Butane Volume
Additional
Gasoline
Production
Total Cost
Excluding
Subsidies
Per-Gallon Cost
Excluding
Subsidies
(cents per
gallon)
Yes No Yes No Yes No Yes No
-439 -133 -275 174 -667 -133 -510 174
-2,484 -2,826 -2,638 -3,141 -4,350 -4,948 -4,507 -5,270
619 582 548 496 1,606 1,542 1,507 1,426
0.41 0.38 0.38 0.33 1.05 1.01 0.99 0.93
Our analysis shows that when considering all the costs associated with these fuel
changes resulting from the expanded use of subsidized ethanol that these various possible
79 EPA typically assesses social benefits and costs of a rulemaking. However, this analysis is more limited
in its scope by examining the average cost of production of ethanol and gasoline without accounting for the
effects of farm subsidies that tend to distort the market price of agricultural commodities.
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