AMES, Iowa - A new study released this week found that last year, ethanol usage lowered wholesale gasoline prices by 89 cents per gallon on average, DomesticFuel.com reports. According to the Iowa State University and University of Wisconsin study, the growth in ethanol production correlates with a decrease in gasoline prices of 25 cents on average.

"This study confirms that ethanol is playing a tremendously important role in holding down volatile gasoline prices, which are currently inching closer to all-time record highs," said Bob Dinneen, president of the Renewable Fuels Association. "As rising oil prices are contributing to higher retail costs for everything from gas to food to clothing, ethanol is clearly providing some real relief for American families."

The study also revealed that ethanol significantly affected gasoline prices last year. "In 2010 alone, ethanol reduced the average American household??s gasoline bill by more than $800," said Dinneen.

The study??s authors wrote that taking away ethanol??s representation of 10 percent of the gasoline supply today would increase pump prices in the 41 percent to 92 percent range. The authors went on to point out that "the ethanol industry now provides approximately 10 percent of the gasoline used in automobiles, an amount that exceeds the spare capacity of U.S. oil refineries."

If ethanol was removed, the authors concluded that the "'missing?? fuel would have to be imported in the short run, and the required volume would be large relative to available import supplies. The only way to solve this short-term supply problem would be to use high gasoline prices to ration demand."

For more on ethanol and the future of fuels, watch the NACS TV series on the topic at nacsonline.com/gasprices.