Sign of the times: Ethanol almost 40 cents cheaper than gas
Driving around mid-Michigan over the weekend, I couldn't help but notice how much gas prices have jumped in the last few weeks. According to AAA, the national average price for a gallon of regular gas has jumped up 50 cents in the past month to $2.50. Well, this is a good time to have a flex-fuel vehicle if a local Mobil station is representative of a national trend. Filling up with the biofuel around here will save you 38 cents per gallon, which is something to think about even though there's less energy in the corn juice. Actually, according to E85 Prices, the national average difference is about 42 cents a gallon. A gallon of E85 will cost you something like $2.08, they say. What do the signs look like in your neck of the woods?
Reader Comments (Page 1 of 3)
Snowdog 9:02AM (6/01/2009)
Still doesn't make economic sense to the driver to fill up with E85 because you will lose 30% of your fuel economy.
Break even price is when e85 price = 70% RUG price.
$2.75*.7 = $1.92.
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Carney 12:33PM (6/01/2009)
It does in the long run when your economy is not held hostage by OPEC. The uncertainty over whether gas prices will be jacked up by the cartel's next arbitrary decision to cut production inhibits investment and credit, hurting job growth. It also directly harms auto sales as potential customers fear crippling refueling costs.
The price at any given time of ethanol v. gasoline is less relevant than the reality than no one entity or coalition even can "corner" the market or alcohol fuel, and that alcohol's price in the long run is more stable and predictable at reasonable and affordable levels, especially if me throw open the gates to cheap foreign ethanol and make extremely cheap methanol a standard.
paulwesterberg 2:58PM (6/01/2009)
Technically only 85% of the fuel is ethanol so the calculation should be along these lines:
$2.76*.85*.7 + $2.76*.15 = $2.06
So the percentage you should use is closer to 75%, but you are correct that people buying ethanol to save money are foolish because they will get much worse mileage.
http://www.fueleconomy.gov/feg/compx2008f.jsp
Also note that 85 means up to 85% ethanol, so you might break even at current rates if you get some fuel that is less than 50% ethanol... But this might be difficult to determine without bringing your chemistry set to the gas station.
Also note that every gallon of ethanol has been subsidized by 50 cents of pork barrel spending to make it appear to be affordable.
Snowdog 5:04PM (6/01/2009)
Paul I wasn't paying that level of attention because E85 still kicks MPG down by about 30% so the the composition isn't all that important.
Carney. Well you already know. I wasn't looking at the externalities because it only gets worse and worse for ethanol. It doesn't do anything you claim it does because it makes such a negligible blip of a drop in energy usage the benefits have no merit. Then we get to the ridiculous subsidies.
Corn ethanol is nothing but a welfare program. Which should work out fine now as the main producer of E85 vehicles is chapter 11 GM (AKA Government Motors).
Government propped up ethanol industry burning ethanol in government propped up GM cars, all of which would collapse like a house of cars if not being funded by handouts. Paradise for the Carneys of the world.
Tim 9:14AM (6/01/2009)
This time I have to agree with Snowdog.
Wake me up when e-85 is 30% less expensive that regular gas.
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TylerDurden 9:23AM (6/01/2009)
Tim,
Stay close, I'll be waking you up (over and over again) in a few months.
Tim 9:27AM (6/01/2009)
No nightmares, please. Only happy, non-food based ethanol allowed!
Joe 9:54AM (6/01/2009)
Tyler- I doubt it. My guess is Ethanol prices rise with gasoline prices. Just like they have in the past.
Mike 11:02AM (6/01/2009)
its cheaper therefore better, doh! goes to show you how gullible the general public is, lol.
Diesel is more expensive part of the year (Michigan) too and yet the sheeple don't understand it has many more BTUs than gasoline.
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Cellien 11:30AM (6/01/2009)
There are very few E-85 stations that I know of around the Austin area.
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Yikes 12:01PM (6/01/2009)
Take away all the taxpayer subsidies to grow the corn, what is the REAL price of that E85!
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Carney 12:34PM (6/01/2009)
What about the costs of the Iraq and Afghan wars, the 2008 crash, and 9/11, all fueled by oil?
ChrisW 1:33PM (6/01/2009)
Yikes is right
Ethanol is a waste of money; studies have show this time and time again.
Carney needs to get out from under his/her rock. There is alot more involved in the Iraq/Afghan wars than oil. The 2008 crash is a common debt crisis, mostly having to do with the bubble of overinflated housing prices coming bursting, not a few months of higher gas prices.
Carney 2:50PM (6/03/2009)
ChrisW, without oil revenues, the Saudis and others could not have turned Wahhabism from a fringe cult into the powerhouse of worldwide Islam, shouldering aside the former far more moderate establishment. To get a sense of this wrenching and revolutionary change it's as if "Christian Identity" (a tiny Nazi/Klan style cult) suddenly eclipsed the Vatican in wealth and influence in just a few decades.
All over the world, they've been funding mosques, charities, cultural centers, pressure groups, newspapers, TV stations, prison outreach, and tens of thousands of madrassas, mental slaughterhouses where poor boys attracted by free food and lodging are taught only rote Koran memorization and that the way to paradise is murdering not only non-Muslims but non-Wahhabis. Graduates of these academies are waging murder campaigns from Nigeria to Indonesia, inclusive.
That's what the Taliban ARE, religious students, fanaticized by the Saudis. No oil money, no Taliban. Similarly, the al Qaeda and similar groups were funded one way or the other by oil wealth, mainly from Saudi Arabia.
Carney 2:56PM (6/03/2009)
Yikes, if we allowed in cheap Brazilian ethanol and made methanol compatibility a standard feature in cars, alcohol fuel would be far cheaper, without any need for subsidies.
Don't use the subsidy policy as an excuse to reject ethanol or alcohol fuel in general.
Furthermore, the market manipulation engaged in by OPEC is an artificial propping-up of the price of oil that massively dwarfs anything we do for ethanol. Total "subsidies" for ethanol are less than $10 billion annually. Laughable in comparison to the fact that gas prices went from $11 a barrel in 1999 to $140 a barrel in 2008 (an increase of HUNDREDS of billions in what we paid, due solely to OPEC restrictions on production.
contact 4:18PM (6/01/2009)
Where I'm from diesel is about $0.20/gallon cheaper than regular. It's also more efficient.
I think ethanol is being forced on a public that, for the most part, doesn't want it.
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martin stevens 1:51PM (6/01/2009)
Chris w. your comment is that Iraq/Afghan wars were about more than oil. If we were really concerned about stabilizing the world we would be focusing on North Korea instead of having 130,000 troops concentrated in the oil rich areas of the world. But alas there are no oil fields on the Korean peninsula for us to worry about
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ChrisW 2:11PM (6/01/2009)
we get a small part of our oil from the middle east. Over 80% of our oil comes from Canada, Mexico, and Venezuela. There is also an abundance of oil in Canada's oil sand fields that have hardly been touched.
Oil is not our main concern for being in the middle east.
martin stevens 2:49PM (6/01/2009)
....we import more oil from Saudi Arabia, Iraq, and Kuwait combined than Canada. We import almost 2 million barrels per day from these three countries alone. This seems like a significant amount of product coming from a very volatile section of the world. If we increased our blend of ethanol from 10% to 15% we would replace the equivalent of oil imported from Iraq alone. You should really check your facts about the amount of oil imported from Canada, while we do import a large portion, 80% is not close to the actual number (more like 23%).
Snowdog 5:23PM (6/01/2009)
I just checked numbers for Mar 09 Petroleum imports.
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html
Kuwait didn't make the top fifteen. In fifteenth spot is Norway. Assume that Kuwait = Norway.
Here is the top 5 + 15th:
CANADA 2,438
MEXICO 1,199
VENEZUELA 1,106
SAUDI ARABIA 967
IRAQ 587
Norway 192
967+587+192 = 1736. 1736 < 2438.
Also ethanol doesn't replace gas one to one. It only has a 30% energy gain in production. Many cars seem to return even less than expected MPG when burning E10 since they aren't set up optimally for the fuel, that real return is even less than that.
Corn Ethanol is nothing but a welfare lobby.