Spatial Incidence of National Policies and Fixed Infrastructure: An Application to the Ethanol Mandate

Using a quantile difference-in-differences econometric approach to analyze weekly gasoline price data for 200 cities from 2007 to 2014, we find evidence that the Renewable Fuel Standard (RFS) ethanol mandate differentially impacted gasoline prices across the U.S. Driven by the east coast- which receive roughly half of all ethanol shipments- cities farther from ethanol production centers paid significantly higher gasoline prices than cities close to ethanol production centers. We argue that the observed price differences are driven by transportation costs for ethanol which, unlike petroleum, cannot be shipped via pipeline. Our research design attributes our findings to positive ethanol RIN (renewable identification numbers) prices from the ethanol mandate binding after 2013.