AMES, Iowa — Iowa State University economists have put the timeliest touch on the monetary value of the Renewable Fuel Standard (RFS), saying in a study released earlier this month that gasoline savings alone totaled an average $142 for every American family in one year.

 

The year studied by ISU economists Gian Carlo Moschini, Harvey Lapan and Hyunseok Kim was 2015, and the researchers determined that the fuel mandate which requires blending of ethanol into the nation’s gasoline supply saved the U.S. economy about $17.8 billion in that year alone.

“The results confirm that the current RFS program considerably benefits the agriculture sector, but also leads to overall welfare gains for the United States,” the authors wrote in the study. “We find that the RFS has indeed proved to be a remarkably effective tool for farm support.”

The economic modeling the researchers used looks at the 2015 year with the eight-year-old RFS in place, as well as if it didn’t exist.

The study that is available online at www.card.iastate. edu/products/publications is scheduled to be published in the American Journal of Agriculture next month.

“By sizably expanding demand for some agricultural products (e.g., corn to produce ethanol), the RFS is credited with having contributed substantially to increased commodity prices. These price increases have benefited farmers, and led to large land price increases,” the economists wrote.

Because of the ethanol mandate, gasoline prices were lowered an average of 18 cents per gallon, according to the study’s results. But without the mandate, corn prices overall would have averaged about $2.75 per bushel, well below the average 2015 price of about $3.68 per bushel.

Without the RFS, corn prices wouldn’t have come close to covering production costs, particularly as input prices ballooned, the authors wrote. The study touches on reductions of greenhouse gas emissions because of the RFS, saying that “the increased use of biofuels does reduce carbon emission in the United States” but that the benefit is outweighed by the use globally of higher amounts of petroleum-based fuels. It also takes note of land use issues, and the need for further study.

 

Biofuel policies’ impact on land use has led to controversies, including the food versus fuel debate and whether biofuels yield actual net environmental benefits,” the authors wrote.

“In addition, development and production of cellulosic biofuel – one of the RFS’ signature features – has severely lagged the mandates schedule. The RFS remains controversial, and there is considerable interest in a comprehensive assessment of the current and future economic impacts of the RFS.”

Nonetheless, biofuel supporters lauded the study, noting it is the latest example of how much the law has benefited the agriculture industry and consumers overall. “This new study confirms that American families and our nation’s economy significantly benefit from the Renewable Fuel Standard,” said Renewable Fuels Assoc. CEO Bob Dinneen.

“Whether it is lower gas prices, decreased oil imports from hostile nations, a more valuable agriculture sector or reduced greenhouse gas emissions, this study underscores that the RFS is indeed delivering on its promise and meeting the goals established by Congress when it adopted this seminal energy policy.”