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Mark Green's picture
American Petroleum Institute

Mark Green joined API after 16 years as national editorial writer in the Washington bureau of The Oklahoman newspaper, capping a 30-year career in print journalism. At API he is responsible for...

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The Ethanol-Gasoline Cost Gap

Ethanol advocates often assert that ethanol costs less per gallon than gasoline while trying to justify the Renewable Fuel Standard (RFS).  While it’s true that on a gallon-to-gallon basis ethanol historically has been cheaper than gasoline, ethanol contains far less energy than gasoline and therefore has cost consumers more to travel the same distance, as I pointed out (here, here and here).  Look at the graphics below, produced by EPA and the Energy Department: The real costs to consumers, measured in fuel economy, has been significant.

As you can see, vehicles that can run on either gasoline or E85 (average 74 percent ethanol content) get significantly fewer miles per gallon when using comparatively low energy ethanol blended fuels.  This means that in addition to the extra money consumers have been forced to spend per year if they choose to use E85, they also have needed to refuel more often.  The recent rise in corn prices suggests this price difference could continue.

Sure, consumers have the right to choose which fuels to purchase. But Big Ethanol should stop the misinformation campaign that glosses over the fact that ethanol has been a more expensive fuel. Promoting the benefits of mid/high-level ethanol blends, while basically ignoring the higher cost on a per-mile basis, is a disservice. Ethanol has some favorable properties and makes a good additive, but misleading consumers, claiming it has been less expensive than gasoline, is shameful and unfair.

The ethanol mandates in the RFS are unworkable and need to be repealed. If ethanol advocates want to claim otherwise and use the government to force consumers to buy their historically more expensive product, they should make their case based on the facts.

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Robert White's picture
Robert White on May 15, 2013

I encourage the readers of this blog post to run their own math. The above graphics assume that your local gasoline price is $3.29/gal and your E85 price is $3.17/gal. The national average gasoline price today is near $3.60, and there are plenty of locations in the United States offering E85 in the $2 to $3 range today. The above graphic also assumes that your mileage penalty will be between 20-25% when using E85. This calculation, done solely with BTU content, assumes your options are pure gasoline without ethanol and true E85 (85% ethanol, 15% gasoline). Since 96% of all fuel today contains 10% ethanol, and the author of this blog posts admits that E85 is 74% ethanol on average, one would think we should recalculate. That is a 21% difference in ethanol content, definitely worth noting. If my math is correct, that would reduce the mileage penalty to 15-18% on average. According to E85prices.com, E85 is averaging a 16.6% discount today, and would produce a wash at the pump for those consumers wanting to use E85. But, consumers should do their own test. Calculating this out on paper doesn’t matter unless you can replicate it on the street. Keep in mind, it doesn’t cost you an additional dollar to own a flex-fuel vehicle (FFV), but it might just save you countless dollars at the pump. It will also reduce your overall emissions, and make your vehicle run on a fuel made from renewable sources.

All that said, the savings for consumers goes way beyond the pump and that is what the ethanol industry has been saying for years. The oil industry doesn’t want to look past the pump, not on ethanol, and definitely not on their product. You can read the reason why the ethanol industry touts the savings to consumers here: http://bit.ly/10H2rFn. Ethanol is cheaper than gasoline at production, at the fuel terminal and at the retail gas station. Don’t take my word for it, the data is out there for you to find. API just hopes you will not look for it.

Dan Mccullough's picture
Dan Mccullough on May 16, 2013

Well Lets See Gasoline (E10)  shot up to $4.19 today .. I paid $3.04 for E85 a 27% Discount   My 2011 HHR gets 17% lesss MPG on E85 than it does on Gasoline so I am coming on far ahead on Price AND I didnt have to kill anyone for it.. didnt have to send the kids off to die and kill for it.

The United States Produces more Oil now than they ever have ..and prices keep going up.. How?

Well lets see they Shut down 2 refineries in Michigan today..Closed 2 Refineries ..may be offline until after the 4th of July.  Of Course Oil  will claim that the Holiday Travel season has nothing to do with closing refineries so they can line their pockets with a few extra billion thanks to all you “vacationers” 

 

Just one more reason to say enough is enough ..no more Monopolies.. Drive on E85 , Drive an electric car ,ride a bike ..just dont keep giving Oil your money..spread it around and lets get some real competition going

 

 

Robert White's picture
Robert White on May 17, 2013

These seem pretty timely, here are some pictures of E85 pricing that readers should note and do their own calculations. This one is from Morris, MN taken within 24 hours: https://twitter.com/CarsonBerger/status/335383168821633024/photo/1  This one is from Des Moines last night, a $.96/gal differential: https://twitter.com/amick_matt/status/334853056342683651/

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