E85: Encyclopedia II - E85 - Cost

E85 - Cost

As of 2005, E85 is frequently sold for a 0 to 35% lower cost than gasoline. Much of this discount can be attributed to various government subsidies, and, at least in the United States, the elimination of state taxes that typically apply to gasoline and can amount to 47 cents, or more, per gallon of fuel. The federal tax exemption that keeps ethanol economically competitive with petroleum fuel products is due to expire in 2007, but this exemption may be extended through legislative action. In the aftermath of Hurricane Katrina in 2005, the price of E85 rose to nearly on par with the cost of 87 octane gasoline in many states in the United States, and was for a short time the only fuel available when gasoline was sold out, but within four weeks of Katrina, the price of E85 had fallen once more to a 20% to 35% lower cost than 87 octane gasoline.

The price of E85 has risen quickly during 2005 also due to additional factors. With the signing into law of the Energy Policy Act of 2005, US Federal consumption of E85 jumped, causing shortages of E85, along with a rise in prices.

Likewise, after Hurricane Katrina and Hurricane Rita, and with ethanol shortages exacerbated due to the increased US Federal fleet use of E85 starting August 8, 2005, US companies resumed importing high-priced ethanol from Brazil despite the additional 57-cents-a-gallon import tax because the price of the ethanol component of E85 was still economical compared to gasoline prices rising with crude oil prices going above $60 per barrel. (See Barron's, Commodities Corner, A Rally Running on Fumes, by Grace Fan, October 31, 2005. [2] )

Unfortunately, because ethanol contains less energy per gallon of fuel than gasoline, fuel economy is reduced for most 2002 and earlier FFVs (flexible-fuel vehicles) that are currently on the road by about 30% (most after 2003 lose only 15-17%, or less) when operated on pure E85 (summer blend.) Some of the newest vehicles can lessen this reduction to only 5-15%. A few cars actually claim to provide better fuel economy on E85 than on gasoline; for example, one Saab turbocharged car actually claims better fuel economy on E85 than gasoline through using a higher compression ratio engine. Still, for almost all FFVs, more E85 is typically needed to do the same work as can be achieved with a lesser volume of gasoline. This difference is usually totally offset by the lower cost of the E85 fuel, depending on E85's current price discount relative to the current price of gasoline.

For example, an existing pre-2003 model year FFV vehicle that normally achieves, say, 30 MPG on pure gasoline will typically achieve about 20 MPG, or slightly better, on E85 (summer blend.) When operated on E85 winter blend, which is actually E70 (70% ethanol, 30% gasoline), fuel economy will be even better than when operating on the summer blend. To achieve any short-term operational fuel cost savings, the price of E85 should therefore be 30% or more below the price of gasoline to equalize short term fuel costs for most older pre-2003 FFVs for both winter and summer blends of E85. Life-cycle costs over the life of the FFV engine are theoretically lower for E85, as ethanol is a cooler and cleaner burning fuel than gasoline. Provided that one takes a longterm life-cycle operating cost view, a continuous price discount of only 20% to 25% below the cost of gasoline is probably about the break-even point in terms of vehicle life-cycle operating costs for operating most FFVs on E85 exclusively (for summer, spring/fall, and winter blends.)

Fuel economy in fuel-injected non-FFVs operating on a mix of E85 and gasoline varies greatly depending on the engine and fuel mix. For a 60:40 blend of gasoline to E85 (summer blend), a typical fuel economy reduction of around 23.7% resulted in one controlled experiment with a 1998 Chevrolet S10 pickup with a 2.2L 4-cylinder engine, relative to the fuel economy achieved on pure gasoline. Similarly, for a 50:50 blend of gasoline to E85 (summer blend), a typical fuel economy reduction of around 25% resulted for the same vehicle. (Fuel economy performance numbers were measured on a fixed commute of approximately 110 miles roundtrip per day, on a predominately freeway commute, running at a fixed speed (62 mph), with cruise control activated, air conditioning ON, at sea level, with flat terrain, traveling to/from Kennedy Space Center, FL.)

Adapted from the Wikipedia article "Cost", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki