There’s been plenty of political rhetoric and attacks using Big Oil talking points on the Renewable Fuels Standard (RFS) recently. Unfortunately, it appears that the same people making attacks have chosen to ignore a study released last week by energy economist Philip K. Verleger that concludes ethanol and the RFS have lowered gas prices by as much as $1.50 per gallon.
Had Congress not raised the renewable fuels requirement, commercial crude oil inventories at the end of August would have dropped to 5.2 million barrels, a level two hundred million barrels lower than at any time since 1990. The lower stocks would almost certainly have pushed prices higher. Crude oil today might easily sell at prices as high as or higher than in 2008. Preliminary econometric tests suggest the price at the end of August would have been $150 per barrel.
You can read more of Verleger’s commentary here.