A paper co-authored by an MIT economist and an economist from the University of California at Davis question claims by a previous ethanol study showing the biofuel lowers gasoline by $0.89 to $1.09 per gallon.
MIT’s Christopher Knittel says his study is not intended to affect one policy over another, but consequences could arise if policy is based on faulty data.
Knittel and his co-author, economist Aaron Smith of the University of California at Davis, discussed the topic in a paper published in an upcoming issue of The Energy Journal. Their analysis challenged work by Dermot Hayes, an Iowa State University economist, showing the effect of ethanol on reducing the price of gasoline.
“Making claims about the benefits of ethanol that are overblown is only going to set up policymakers for disappointment,” Knittel says.