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Time to buy E85?

pgwenthold

Penultimate Amazing
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Have any of you noticed something odd? Gas prices are going up, up, up, and we hear a lot about the rising cost of oil. So can someone explain, why are E85 prices going up right along with the price of gas? If you look, you will find that, in fact, the price of ethanol has NOT gone up recently like oil has.

Think about this for a bit. Remember back in the day when regular gas was $2.50 a gallon. At the time, E85 was probably something like $2. Now, gas is up to $4, and what is the price of E85? Well, the local Meier has it at $3.49. Why? If the price of gas was really going up because of the increased price of oil, E85, which is only 15% gas, should only go up 15% as much. So when gas jumps $1.50, then E85 should increase $0.25. Why can't we get E85 at $2.25? E85 shouldn't be increasing right along with regular gas - at least, not to the same extent.

Interestingly, one of the local convenience joints now has E85 at $2.99. With gas at $3.99, that is suddenly worth the 20% drop in power that you get from E85. If prices stay the same, my next fillup will be with E85.

This is what E85 is supposed to be. It is supposed to be an ALTERNATIVE to gas, which we can use instead of gas. However, as long as gas companies keep artificially increasing the price of E85, instead of pricing it competitively to increase the amount of it's sale, it isn't going to be an affordable alternative.

You'd have to think that selling E85 at $2.99 has to be a huge windfall for gas companies, considering that ethanol fuels are still subsidized. But given that the price of ethanol hasn't gone up, they should still be able to sell E85 really cheap. The profit markup of E85 at $2.49 should be pretty much the same as gas at $4 ($0.25 a gallon is usually a higher markup than usual, right?).

I don't know who's pushing the huge prices on E85, but they making a huge mistake. E85 at $3.49 when gas is $4 is stupid. Who are the people buying that? As I said, $2.99 is actually to the point where it is cost effective.

Last point: at some point, E85 is going to lose it's subsidy. That is only fair. I can imagine that it is not cost effective to sell E85 at $1.89/gallon. However, if they still need to be subsidized at $3 a gallon, then man, this is not going to be much of an alternative. What is the sustainable price of E85? Take that, add 20%, and that is how much gas has to cost before unsubsidized E85 is a cost-effective alternative to gas.
 
I don't buy E85, because I don't want to encourage stupidity. So for me, the price is irrelevant.
 
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When I have filled in CA, I have noticed a 15-20% drop in my gas mileage. Maybe cars made to use ethanol will do better, but E85 is not a good deal unless they sell it at a lower price compared to real gas.

Ranb
 
Ranb said:
When I have filled in CA, I have noticed a 15-20% drop in my gas mileage. Maybe cars made to use ethanol will do better, but E85 is not a good deal unless they sell it at a lower price compared to real gas.
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Please read the OP of this thread.
 
Almo said:
Especially when it takes fuel to make the food.
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The question about the net energy balance is a good one, but the idea that "you shouldn't use food for fuel" is nonsense. When food in in oversupply and fuel is low, then absolutely it makes sense to use food for fuel. There is always going to be some balance point. At some point, it is absolutely true that it more cost effective to burn money than to use it to buy fuel. The same will go for food.

I'm not saying that we are there yet, but to suggest that it is "stupid" is stupid in its own right.

Lastly, to dismiss it because "it takes fuel to make the food" is also shortsighted. It also takes fuel to pump oil from the ground. That doesn't mean we shouldn't do it. As I mentioned above, the question is about the net energy balance. Ethanol is certainly debatable, and close enough to probably not be worth it in the end. Soy diesel, OTOH, is pretty clearcut (because there is far less processing needed and the conversion is far more efficient). Thus, conversion to soy diesel could affect the balance of everything.
 
Slightly off-topic, but does anyone know why diesel prices (in the U.S. anyway) are so much higher than gasoline prices? Diesel is less refined; keeps better. What is the justification for this?
 
pgwenthold said:
The question about the net energy balance is a good one, but the idea that "you shouldn't use food for fuel" is nonsense. When food in in oversupply and fuel is low, then absolutely it makes sense to use food for fuel. There is always going to be some balance point. At some point, it is absolutely true that it more cost effective to burn money than to use it to buy fuel. The same will go for food.

I'm not saying that we are there yet, but to suggest that it is "stupid" is stupid in its own right.

Lastly, to dismiss it because "it takes fuel to make the food" is also shortsighted. It also takes fuel to pump oil from the ground. That doesn't mean we shouldn't do it. As I mentioned above, the question is about the net energy balance. Ethanol is certainly debatable, and close enough to probably not be worth it in the end. Soy diesel, OTOH, is pretty clearcut (because there is far less processing needed and the conversion is far more efficient). Thus, conversion to soy diesel could affect the balance of everything.
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The recent run up in the price of corn (and other food) would indicate that we don't have a surplus. And even if we did, it would be wise to store it for when we don't.

I'm afraid the verdict is in on this one. Using food to fuel cars is monumentally stupid. And unsustainable, long term.
 
The Central Scrutinizer said:
The recent run up in the price of corn (and other food) would indicate that we don't have a surplus.
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Or that we are starting to get a demand to catch up with the supply finally.

I don't feel like looking up the inflation rate for the last 25 years, but the price of corn at $4 probably isn't too far off the price that it was 25 years ago, adjusted for inflation (I remember in the early 80s when corn was getting to be unprofitable at $2.10; $2.50 was better). At a 2% rate of inflation, that $2.50 is up to $3.65 in 20 years. Meanwhile, that $30 barrel of oil is up to $43.

Corn at $4 is not out of line with what it was back in the early 80s. Remember back when it was $2.10 was when the government started PIK and other non-growing incentives (which they still have, in fact).
 
The Central Scrutinizer said:
The recent run up in the price of corn (and other food) would indicate that we don't have a surplus. And even if we did, it would be wise to store it for when we don't.

I'm afraid the verdict is in on this one. Using food to fuel cars is monumentally stupid. And unsustainable, long term.
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How exactly is the verdict in? How does this work? Have we used every available square foot of cropland in America? Do you have an amazing time machine that can slow time down so perishable food doesn't... perish?

The verdict is in: The above is ill-informed hogwash.
 
quarky said:
Slightly off-topic, but does anyone know why diesel prices (in the U.S. anyway) are so much higher than gasoline prices? Diesel is less refined; keeps better. What is the justification for this?
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Well for one it is about 10-20% denser than gasoline, so you would need to correct from a volumetric measurement to a mass based one to start with.
 
ponderingturtle said:
Well for one it is about 10-20% denser than gasoline, so you would need to correct from a volumetric measurement to a mass based one to start with.
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IIRC, it is also based on the percentage being refined. Diesel used to cost less than regular.
 
Tailgater said:
IIRC, it is also based on the percentage being refined. Diesel used to cost less than regular.
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It also depends on the quality of the finished product. Diesel on the American market used to be very dirty, with a high sulfur content; whereas European market diesel was a much higher grade, cleaner, with a very low sulfur content. European-manufacture diesel vehicles could not handle the dirtier American diesel.

The diesel currently available for the American market is now refined to match the European standards, which increases the cost of processing, which in turn raises the price of the end product. This is to allow the importing of European diesel engines; which increases the number of diesel vehicles on the road without major retooling by American auto manufacturers.
 
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GreyICE said:
How exactly is the verdict in? How does this work? Have we used every available square foot of cropland in America? Do you have an amazing time machine that can slow time down so perishable food doesn't... perish?

The verdict is in: The above is ill-informed hogwash.
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You want to withhold judgement until every last acre of cropland is used for fuel, not food?

:jaw-dropp
 
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The Central Scrutinizer said:
I don't buy E85, because I don't want to encourage stupidity. So for me, the price is irrelevant.
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You are cross-subsidising development of new technology though, engine, fuel infrastructure and crop. Creating a market - and don't forget, you can grow energy crops in some places where you can't practically grow food (though admittedly probably not on a large scale). So it rather depends where you predict things to end up in the future, and whether you can hurry it along.

Hybrid cars arguably use more resources than petrol ones. But buying them does push development. It's not quite that black and white.
 
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