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Jefferson City, MO – E85 refueling locations have more than doubled in the past year, making more availability for the almost six million compatible vehicles on American roads. Unfortunately, the price at the pump has not been the most attractive in recent months.
When using E85 in a flexible-fuel vehicle, one will receive a 5 to 12 percent mileage reduction than when using unleaded gasoline in the same vehicle. This reason is simple – E85 contains less energy, lower British Thermal Units (BTUs) than regular unleaded gasoline. Thus, to be advantageous for a consumer, the price of E85 must be lower than that of regular unleaded gasoline. Unfortunately, at this time, the price of E85 is sometimes higher than regular unleaded at many refueling locations.
What are the factors that are resulting in these high E85 prices? One of the main reasons is that ethanol demand has recently been at an all-time high. The reasons for this unprecedented demand of ethanol is the phase out of MTBE in parts of the United States and continued reductions in refining capacity. The hurricanes that hit the Gulf Coast in late 2005 created a gasoline shortage throughout the country and in some cases, refinery supplies are still being impacted. Major gasoline retailers needed to extend their fuel supplies, and adding a small percentage of ethanol to their gasoline blend was a short term answer.
Most persons associated with the industry indicate believe that the high cost of E85 is short term. “The price [of E85] is higher but it is being driven by market forces due to a short term market shortage. This should rationalize itself as more production comes on line,” stated Rick Tolman, CEO of the National Corn Growers Association. “E85 has been and will be priced competitively according to market forces. Its production cost is competitive and it does have a bright long term future.”
Phil Lampert, Executive Director of the National Ethanol Vehicle Coalition agrees, “Ethanol is like any other transportation fuel commodity, prices increase during periods of high demand and decrease as supply increases. The ethanol industry is going through a time of unprecedented growth and we expect up to two billon gallons of new production within the next eighteen months. New supplies will result in decreased prices.”
Fuel retailers that are experiencing high E85 prices can work through their marketers or an ethanol plant to enter into a contract to help stabilize their E85 prices. According to Lampert, several ethanol producers are entering into agreements with retailers to supply E85 at levels that ensure the pricing will be less than regular unleaded gasoline. In the meantime, both Tolman and Lampert urge patience with the pricing of ethanol with the assurance that these historically high prices will be falling soon.
To find an E85 fueling facility in your area, visit www.E85Fuel.com. To learn more about the National Corn Growers Association, visit www.ncga.com.
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