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The market and consumer welfare effects of mid-level ethanol blends in the US fuel market

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  • Gallagher, Paul W.
  • Sleper, Daniel

Abstract

This study examines the prospect that a consumer-driven market could eventually replace the myriad regulations and demand quotas in the US ethanol and gasoline fuel market. Given efficient households that minimize the cost of operating automobiles, recent vehicle technology that improves blended fuel substitution, and typical market conditions of the last five years, blended fuels with 20% ethanol concentration could occupy a volume of 82.2 billion gallons in a 138.3 billion gallon gasoline market. The consumer welfare gain associated with blended fuel is $15.9 billion annually for US consumers, or about $1000 over the life of a vehicle.

Suggested Citation

  • Gallagher, Paul W. & Sleper, Daniel, 2016. "The market and consumer welfare effects of mid-level ethanol blends in the US fuel market," Energy Policy, Elsevier, vol. 98(C), pages 149-159.
  • Handle: RePEc:eee:enepol:v:98:y:2016:i:c:p:149-159
    DOI: 10.1016/j.enpol.2016.08.025
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    References listed on IDEAS

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