Last year, when crude oil prices soared, ethanol's growing presence in the fuel market kept retail gasoline prices in check, according to a study published recently by Iowa State University's Center for Agricultural and Rural Development.

In 2011, motorists saved an estimated $1.09 per gallon of fuel. Based on the average household consumption of 1,124 gallons of gasoline a year, families averaged a savings of $1,200 compared to what they would have paid without the 14 billion gallons of US-made ethanol that was blended into gasoline.

"Now we have ten percent more fuel in the market, because ethanol serves as a substitute for gasoline," Sheldon (Xiaodong) Du, assistant professor, Department of Agricultural and Applied Economics at University of Wisconsin, Madison. He said, "Think about supply and demand, the presence of the substitute depresses the price of gasoline."

Prof. Du wrote the study along with Iowa State University's Prof. Dermot J. Hayes--it's an update, using the same methods as a peer-reviewed paper published in 2009 in the journal Energy Policy.