E85 Pricing Reports
When I read the following quote, I immediately thought of the recent Business Week article claiming that availability – which they claimed is being hampered by oil companies – is the primary reason E-85 is not taking hold.
I don’t buy E-85 for my flex fuel Ranger even though it is readily available around here with all the ethanol plants. It’s because the price is never less than 80% of the price of E-10. I get 80% of the mileage with E-85 that I get with E-10.
The above quote comes from a devoted ethanol advocate and corn farmer, who frequently posts at The Oil Drum. If he isn’t willing to spend extra money on E-85, then can you really expect the general public to do so? Price is a much clearer explanation than Business Week’s conspiracy theories for why E-85 is not more popular. Price matters.
In addition to gasoline and diesel, AAA has started tracking E85 pricing. Their report is published each day at:
Not only do they publish the price of E85, but they also publish a BTU-adjusted price, which is actually a gasoline equivalent price. This price can be used to compare actual per mile fuel costs. AAA explains:
The BTU-adjusted price of E-85 is the nationwide average price of E-85 adjusted to reflect the lower energy content as expressed in British Thermal Units – and hence miles per gallon – available in a gallon of E-85 as compared to the same volume of conventional gasoline. The BTU-adjusted price calculated by OPIS and AAA is not an actual retail average price paid by consumers. It is calculated and displayed as part of AAA’s Fuel Gauge Report because according to the Energy Information Administration E-85 delivers approximately 25 percent fewer BTUs by volume than conventional gasoline. Because “flexible fuel” vehicles can operate on conventional fuel and E-85, the BTU-adjusted price of E-85 is essential to understanding the cost implications of each fuel choice for consumers.
It is of interest to note these BTU-adjusted E85 prices. Despite the fact that ethanol prices (and margins) have collapsed, and gasoline prices remain high, the adjusted E85 price remains higher than that of gasoline. Yesterday’s prices show regular at $2.81, E85 at $2.33, and the BTU-adjusted price of E85 at $3.07. I think ethanol prices will begin to recover as the mandated ethanol levels increase and as the industry goes through a shakeout, so the E85 price gap is not likely to significantly improve.
Is it really a mystery why gas station owners aren’t rushing out to install more E85 pumps? If the demand is there, the pumps will come.