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On the Value of Ethanol in the Gasoline Blend

Read farmdocDaily Article

There has been much debate and much written about the likely costs and benefits of including ethanol in the domestic gasoline supply. Costs and benefits fall into two major categories–environmental and economic (e.g., Stock, 2015). One economic consideration is the potential impact on domestic gasoline prices from augmenting the gasoline supply with biofuels. A second economic consideration, and one that has received the most attention, is the cost of ethanol relative to petroleum-based fuel. What has been missing from the analysis of the value of ethanol in the gasoline blend is an estimate of the net value of ethanol based on: i) an energy penalty relative to gasoline; and ii) an octane premium based on the lower price of ethanol relative to petroleum sources of octane.

This farmdocDaily article provides an analysis of that net value since January 2007.

It is True – 20% of the Farms Produce Most of the Value

The 2012 Census of Agriculture hold many unique facts. Researchers at the University of Illinois have been digging through the numbers to find some plumbs. Todd Gleason reports it seems an old adage is borne out by the figures.

There were about 75 thousand farms in Illinois when the 2012 Census of Agriculture was taken by the United Stated Department of Agriculture. The census, by two different measures – acreage operated & value of production – suggests the majority of Illinois farms are small by either categorization. However, there are two interesting facts that flow with these categorizations. The smaller the farm the more likely it is to produce livestock of less total value, and the larger the farm the more likely it is to produce crops – mostly grains and oilseeds - of much greater value.

The Census of Agriculture defines a farm as any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the reference year. The Census classifies each farm's production specialization based on the North American Industry Classification System (NAICS). A "Livestock" farm is