Is E85 Ethanol The Solution To High Gas Prices?

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FlexFuel badge on E85-capable 2009 Chevrolet HHR

FlexFuel badge on E85-capable 2009 Chevrolet HHR

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Ethanol is often touted as being the future fuel of internal combustion vehicles, as it can be more easily--and more locally--produced than regular gasoline, while producing lower greenhouse gas emissions.

That makes it a further step towards energy independence, but does it make it the fuel of the future?

According to The Detroit News, the answer is no--not in the short term, and probably not ever, in the U.S.

Priced too high

E85 ethanol contains a higher ethanol concentration than current blends such as E10 and E15, mixing 85 percent ethanol with 15 percent regular gasoline.

It's hamstrung by several factors, with price being a particularly relevant one. As of today, regular gasoline averages $3.80 per gallon across the U.S. By contrast, E85 is currently cheaper at $3.39 per gallon.

That makes E85 rougly the same price that gasoline was a year ago--a useful discount--but as E85 contains less energy than regular gasoline, fuel efficiency is lower, making the overall advantage much smaller.

The ethanol industry contests E85's current price, suggesting that the wholesale price of the fuel is around 70 cents per gallon less than regular gas, rather than only around 40 cents.

With that difference, they say, E85 would be much more cost-effective.

Even then, the figures show that some consumers simply wouldn't benefit, unless ethanol was significantly cheaper.

GM's Chevrolet Tahoe, when run on E85, gets only 13 miles per gallon, compared to 17 mpg on gasoline--23 percent lower mileage. E85 would have to be lower than $3 per gallon for Tahoe drivers to see any benefit.

Cheaper in Brazil

By contrast, E85 is significantly more popular in countries like Brazil.

Brazil's E85 is produced with sugar cane, rather than corn as in the U.S. This makes it cheaper to produce, and consistent blends allow automakers to supply a reference card that lets drivers know which fuel would be cheaper to use at any one time.

Inconsistent blends in the U.S, where E85 can contain as little as 51 percent ethanol, make the true benefits of filling up on E85 hard to measure.

Throw in poor availability--mostly limited to the "corn belt", ethanol-producing states--and even Detroit's Big Three, all of which offer flex-fuel vehicles, don't seem keen to promote their offerings. If customers see no tangible benefits, then automakers don't benefit either.


So what does E85 need to see an increase in popularity?

Greater availability, for one. The website currently lists 3,000 E85 stations in the U.S, the majority of which are spread throughout the Midwest. In Northwestern states, only a handful of stations sell E85. By contrast, there are over 100,000 gas stations in total in the U.S.

The next is cost. Given the reduction in fuel efficiency from gasoline to high ethanol blends, the price of E85 needs to drop significantly for it to be financially viable for most customers.

Based on the Tahoe example, E85 would need to be up to a quarter cheaper than gas--and even then, the financial benefits would be marginal.

Of course, the environmental benefits do influence some, and the political benefits of reducing dependence on foreign oil--but conversely, reliance on corn ethanol does then instigate the fuel versus food debate.

The bottom line is that, without a significant reduction in price, E85 is unlikely to be a widely-used fuel of the future.


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