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July 13, 2007

Gas Prices Worry Americans More Than Terrorism or Economy

Gaspump With fuel now averaging over $3 per gallon nationwide (AAA Fuel Gauge Report, June 18, 2007), more American consumers declare themselves (highly) concerned about high gas prices (83%) than about terrorism (62%) or the economy as a whole (69%).

So say the findings from the inaugural National Analysts Worldwide  "Foods, Fats, and Fuels" study completed in March that surveyed a nationally representative sample of 502 consumers via the web.

As a result of soaring gasoline prices, consumers are eyeing alternative energy sources such as biofuels in a favorable light. "Biofuel" is a generic term for fuel manufactured from living things, such as ethanol and biodiesel. Among those familiar with biofuels, most (72%) view them as a good way to reduce American's dependence on foreign oil and generate renewable energy supplies (70%).

Still, the National Analysts Worldwide study shows that there is limited consumer understanding about biofuels. More than one in three (36%) consumers says they have never heard of biofuels. And, among those who have, there is uncertainty about the net benefits. Only half (52%) are convinced that biofuels produce less greenhouse gas than fossil fuels and two-thirds (65%) are not sure whether biofuels require more energy to make than they contain.

Ap_gasgauge_2 Ultimately, consumer demand for biofuels comes down to cost. Although 59% of consumers claim to be "very concerned" about the environment, four in ten of those familiar with biofuels say their decision to buy is contingent on a price-at-the-pump that is lower than gasoline; only 12% are willing to pay any sort of premium.

"At the moment, consumer demand for biofuels is propelled almost entirely by pocketbook considerations," notes Debra Kossman, Ph.D., Senior Vice President, National Analysts Worldwide. "With gas prices at an all-time high, large numbers of consumers are prepared to entertain use of biofuels and other sources of alternative energy but there is little conviction behind those opinions. At the moment, public perception is being shaped in an information vacuum - which means it can be reshaped rather quickly."

Hoping for a more affordable fuel alternative, consumers express willingness to support companies that manufacture biofuels - over half (52%) of those who have heard of biofuels agree that companies that make them should receive government tax incentives. Only 2% would oppose construction of new ethanol construction facilities and nearly 6 in 10 (59%) would support construction in their own community.

"All things considered, we seem to be at a real inflection point in the public debate on biofuels," said Susan Schwartz McDonald, Ph.D., President & CEO, National Analysts Worldwide. "For the moment, at least, consumers stand behind the production of biofuels, but their vote of support is propelled solely by the hope of lower fuel prices. Should ethanol production result in higher prices - either at the pump or in the supermarket due to increased demand for corn or other staples - some of those favorable attitudes toward the environmental impact of biofuels could quickly dissipate."

Most consumers are open to the prospect of alternative fuels, though a very small number (5%) of drivers said they would not be willing to purchase biofuel for their own vehicle, even if it cost less per year than gasoline. These respondents voice concern about potential harm to their vehicle's engine and/or performance, the untested nature of biofuels, and a fear that there will not be enough locations from which to purchase biofuels. It is important to note that most vehicles on the road today can already accept ethanol blends; some vehicle owners may not even realize that, depending on their region and the time of year, the fuel they purchase may already contain ethanol blends.

How do you feel about this study? Would you use biofuels if they cost less than gasoline? Please feel free to share your opinion here.

By Brandy Schaffels
Contributing Editor

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