Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...
Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...
Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...
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c. Cost Sensitivity Case Assuming $70 per Barrel Crude Oil<br />
As described above, we analyzed a sensitivity analysis with the future price <strong>of</strong><br />
crude oil remained at today’s prices which is around $70 per barrel. This analysis was<br />
conducted by applying about a 1.4 multiplication factor times the 2004 gasoline<br />
production costs, MTBE <strong>and</strong> alkylate feedstock costs <strong>and</strong> butane value. This factor was<br />
derived by examining the historical association between increasing wholesale gasoline<br />
prices with increasing crude oil prices. We did not adjust the distribution costs, any <strong>of</strong><br />
the utility costs, octane value <strong>and</strong> ethanol prices based on the assumption that these<br />
would change much less <strong>and</strong> therefore we kept them the same as that used in the primary<br />
analysis. The cost results <strong>of</strong> the sensitivity analysis are provided with <strong>and</strong> without the<br />
ethanol consumption subsidies in Table VII.C.5.c-1.<br />
Butane<br />
Removed in<br />
Winter<br />
Total Cost<br />
without<br />
Subsidies<br />
($million)<br />
Per-Gallon<br />
Cost<br />
without<br />
Subsidies<br />
(c/gal)<br />
Total Cost<br />
Including<br />
Subsidies<br />
($million)<br />
Per-Gallon<br />
Cost<br />
Including<br />
Subsidies<br />
(c/gal)<br />
Table VII.C.5.c-1<br />
Estimated Costs for Crude Oil Priced at $70 per barrel<br />
(million dollars <strong>and</strong> cents per gallon)<br />
7.2 Bil Gals 7.2 Bil Gals 9.6 Bil Gals 9.6 Bil Gals<br />
Max RFG Min RFG Max RFG Min RFG<br />
Yes No Yes No Yes No Yes No<br />
-171 -187 -223 -245 222 196 138 105<br />
-0.11 -0.12 -0.15 -0.16 0.15 0.13 0.09 0.07<br />
-2,035 -2,051 -2,080 -2,102 -2,875 -2,901 -2,945 -2,978<br />
-1.34 -1.35 -1.37 -1.38 -1.88 -1.90 -1.93 -1.95<br />
If crude oil stays priced at around $70 per barrel, the cost <strong>of</strong> these fuel changes<br />
would decrease significantly. In fact, we estimate that the 7.2 billion gallon ethanol case<br />
would result in a cost savings to the U.S. even if butanes are removed from the<br />
wintertime gasoline pool when ethanol is added. When considering the ethanol subsidies,<br />
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