-
Subscribe Today!
May
18
Are E85 Prices Fixed Artificially High?
Filed Under E85, E85 / Alt Fuels, E85 prices, alternative fuels, gas prices
Has anyone else wondered why E85 prices always seem to track the price of regular unleaded gasoline? I’ve noticed that there aren’t that many good deals for E85 — unlike in other states (and we’re in a major corn growing state) — our E85 prices are consistently staying a certain number of cents below the price of regular unleaded.
One blogger suggests that E85 dealers could be making a significant profit by marking up E85 a lot more than what it really costs them to purchase. I don’t know enough to know if this calculation is right, but it would be interesting to keep an eye on the Chicago Board of Trade ethanol figures and what is being charged at the pump.
From Non-FFV Running E85:
In response to my post regarding E85 price fixing, one anonymous person shed more light on the price to produce and transfer E85, in order to better determine if gas stations are price gouging on E85.
Here is the new equation:
(Current Ethanol Price - $0.51 Blender Credit) X 0.85
+ (Current Unleaded Price X 0.15)
+ 0.184 Federal Tax
+ 0.20 Michigan Tax
+ 0.03 Estimated Freight Charge per Gallon
= Cost to Gas StationLet’s run these numbers with the current price of ethanol (05/06/2008):
[($2.45 - $0.51) X 0.85] + ($3.65 X 0.15) + $0.184 + $0.20 + $0.03 = $2.612 per gallon E85
One television news report suggests that corn-based ethanol might not be such a great deal. (Note in the report, E85 in New York State is going for $2.99/gallon and regular unleaded is $3.99/gallon — why are we paying so much when we have so much corn in Indiana?)
We need to be careful that we don’t kill off alternative fuels by overpricing them and by using up food crops that drive up America’s food prices, when we could be focusing on using more powerful alternatives (why can’t we use sugar cane ethanol, like Brazil?). America could easily be energy independent, if we really wanted to be. We just never seem to have to will to really make alternative energy work in the U.S.
Video: Is E85 Just Hype?
Related: E85 - Ethanol as an alternative fuel
- Do you drive a flex-fuel vehicle? Are you looking for a place where you can report E85 prices to help...
- Photo by Saintbridge Want to be the nation's hero? Figure out a way that we can solve the high...
- I've been thinking about ways to save money on fuel costs. I've been trying to fill up with E85 as...
- AltFuelPrices.com needs you to report alternative fuel prices. Looking for a way to keep track of alternative fuel prices...
- An E-85 gas pump in Northwest Indiana. A local news station investigates high E-85 prices in the Chicago area....
Comments
15 Responses to “Are E85 Prices Fixed Artificially High?”
Leave a Reply
Have you found any websites that can give you real time pricing for, say, ethanol at the Chicago Merc? I can make an Excel spreadsheet that updates the formula based on the website. Maybe we can figure out how to make a widget based on the Excel spreadsheet?
That would at least tell us how much E85 SHOULD cost at any moment.
Hi Buzz,
The Chicago Board of Trade lists the ethanol market price when the markets are open right on the front page of its website.
http://www.cbot.com/
It would be interesting to find out if the formula is correct because it does seem like the price should be lower — especially when we can observe the price for E85 is lower in other markets.
Maybe the local suppliers charge more to the local retailers?
Chris, I think that I can do this. I just need some time. I think that you can get a widget to show Excel charts that update periodically. That would do it, I think.
I used to have an awesome spreadsheet that would get updates from ESPN for all the baseball teams. I would do an analysis of runs scored vs. runs allowed of all the teams, and use that to predict how the Sox would play against the rest of the teams on their schedule. I’d use this to predict where they would be at the end of the season.
Besides getting updates from ESPN.com, it involved a lot of text searching and manipulation in Excel, none of which I remember how to do. But I just need to reteach myself…
Like I said, just need some time.
Hi Buzz,
You can set up a spreadsheet on the free Google Documents that can be displayed for the world to view, if you want.
It depends on the fuel economy of your flex-fuel vehicle, but most FFVs only get about 75% as much energy per gallon of E85 when compared to the energy produced by a gallon of gas in the same engine. In that case, it isn’t a better deal (3.99*.75=2.99). But if you have a newer car, the performance of E85 is better.
You pay so much in Indiana because corn, ethanol, and gasoline prices are determined in commodities futures markets beyond the boundaries of the state of Indiana.
Commodities are now bought and sold in futures markets that operate on an international level. There were severe droughts and other various natural disasters around the world last year that harmed crop yields globally, which is attributable to the majority of the price increases we see in grains. Increased diversion to ethanol production and away from foodstuffs and livestock feed is part of the increase, but not the majority.
American can’t use cane ethanol like the Brazilians because of two reasons:
We can’t grow sugarcane on a proportional scale. The United States’ agriculture sector is geared to produce wheat and corn because it is good at it.
Congress refuses to remove import penalties on Brazilian cane ethanol that the Brazilians would be more than happy to sell to us in order to protect the domestic ethanol industry (surprised?).
Finally, “could” become energy independent is technically true, as it is technologically and economically possible to cut energy imports to zero. However, we don’t because it would be extremely painful (think 6% unemployment is bad, try double-digit numbers if we slashed and burned into total energy independence). It is not economically feasible because most Americans are not willing to give up a significant portion of their standard of living over night and the economy is naturally risk-adverse (or the key players are supposed to be, anyway).
Hi Marc,
Thanks for your thoughtful insights.
The energy industry is a racket. They are artificially keeping E85 just as expensive so people don’t use it. Look at the numbers and E85 makes NO sense to buy.
http://www.chevrolet.com/impala/specifications/
The Impala gets 18mpg city on gas but gets 13mpg city on E85. Yet in Utah E85 is only .10 cheaper than gas!!
That means if you drive 15k miles per year you will pay $1,102 MORE to drive with E85!!
If the federal government cared SO MUCH about the environment and keeping money in our pockets they would remove the HUGE taxes on E85 (.184 fed and about the same for state)…
Time for everyone to switch to solar, no one can charge or tax us for using energy from the sun but by god they would like to try.
Hi Brandon,
Sometimes it seems that everything that can be done to make it too hard to switch from oil is being done.
If the politicians were really interested in getting E85 up and running, we’d start importing it from Brazil so that we could reduce prices by increasing the quantities available. Also, the sugarcane based ethanol from South America has more energy per unit — it would be an improvement as compared to our corn-based ethanol.
Why can’t the USA use sugar cane like Brazil? Because we (the USA) don’t produce enough sugar cane. It only really grows in southern Florida and Hawaii.
Hi SteveW,
That would make sense that we don’t have the capacity for grow our own sugar cane. It’s too bad we can’t import some from Brazil to increase energy per unit, however. (Or, if things change with Cuba …)
Realistically, cellulosic is the way to go to improve MPG when using E-85.
[...] E85 prices is listed first on Google, but it isn’t necessarily the best for people looking for E85 ethanol prices and fuel stations — especially in these days when E85 ethanol prices can vary greatly between stations and regions. [...]
I don’t know what obama’s strategy is but mcgain is all for e85 and wants to make detroit automakers and imports have all vehicles e85 compliant in a couple years.. Right now the big 3 aim for 50% by 2012.. This is gonna be no different then how HDTV is evolving.. We need more cars (HD sets) to get gas stations (TV stations) to carry e85 and make that investment to make this all pan out..
Hi Rob,
Very true — the nation needs more stations and more ethanol production (and distribution). The same is true with all of the other alternative fuels — hydrogen cars are huge in the news, but there aren’t many places where people can fill them up in the US.
If they can grow sugar beets in North Dakota, they can grow them anywhere. Ethanol producers should use sugar beets instead of corn.
I asked the US Representative for my district to support HR6183, which would remove the tariff on imported ethanol. You have to keep pestering members of congress, or they will not do anything.
Hi Mike,
Excellent suggestion! Until we can get the infrastructure in place to fuel with hydrogen or enough hybrids to satisfy demand, the intermediate way to break free from the perils of foreign oil dependence will be E85 ethanol. If we can increase the energy per unit by using sugar-based ethanol products , we’ll go a long way to making E85 economical and practical.