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Posted on  

June 28, 2000

RFA TO CONGRESS: OIL COMPANIES SHOULD BLEND ETHANOL IN ALL MIDWEST GASOLINE

In testimony before two separate committees of the U.S. House of Representatives, Eric Vaughn today urged the oil industry to utilize the readily available, low cost supply of ethanol to rescue consumers from the failure of the oil industry to properly manage gasoline supplies. Due to ethanol’s low cost, blending 10 percent ethanol in gasoline would save the consumer over 5 cents per gallon in production cost. Further price reductions would result from ethanol’s role in increasing fuel volume.

“Refiners created the tight supply situation in the Midwest, and consumers are paying the price,” said Eric Vaughn, president of the Renewable Fuels
Association (RFA). “The ‘just-in-time’ inventory practices of the refining industry might make sense for the shareholder, but it left consumers
vulnerable to typical supply disruptions. What’s worse, rather than simply admitting their mistake, the refining industry appears intent on assigning blame elsewhere. Major oil companies would have us believe they are innocent victims. The soon-to-be-released quarterly profit reports should shed some light on the real victims - consumers.”

With a net cost of just 71 cents per gallon, ethanol is the most cost-effective fuel available in the Midwest today. Considering the $1.24
wholesale price of gasoline, refiners can displace 10% petroleum costing 12.4 cents and replace it with ethanol costing only 7.1 cents, thereby saving approximately 5.3 cents per gallon.

“Part of the solution to the current gasoline price crisis in the Midwest is the increased use of fuel ethanol,” said Vaughn. “The domestic ethanol industry has alerted oil companies in the Midwest that we are prepared to provide as much ethanol as they can use. The ethanol industry is producing at a record pace. We are prepared to meet the challenge for Midwest fuel supplies - today. All we need are oil companies willing to extend their petroleum supply with ethanol to provide consumers with a high octane, low
cost alternative fuel. Expanding ethanol blending in conventional gasoline would be the most timely and effective means of increasing fuel supplies and lowering consumer costs across the Midwest.”

For more information, please visit the RFA web page at: www.ethanolRFA.org
 

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