Working paper suggests ethanol has lowered the price of gasoline

A working paper from the Center for Agricultural & Rural Development suggests that "growth in ethanol production has caused retail gasoline prices to be $0.29 to $.40 per gallon lower than would otherwise be the case." "The results suggest that this reduction in gasoline prices came at the expense of refiners' profits," the authors said. They also explain that "the availability of ethanol essentially increased the 'capacity' of the US refinery industry and in so doing prevented some of the dramatic price increases often associated with an industry operating at close to capacity." The paper is being presented at the American Agricultural Economics Association in July 2008. The full paper can be found here.