Mercedes Mullins
The price of fuel alcohol per gallon varies depending on the type of alcohol and the region. For example, as of June 2025, the rack price of ethanol was $1.79 per gallon, while unleaded 87-octane gasoline was $2.37 per gallon. The price of ethanol is influenced by factors such as the cost of crude oil, gasoline prices, production costs, legal regulations, and transportation. It is important to note that ethanol is often blended with gasoline or diesel, and the fuel ethanol content is usually indicated on gasoline dispensing pumps. Different blends of ethanol-gasoline exist, such as E10 (10% ethanol), E15 (15% ethanol), and E85 (up to 85% ethanol). The availability of these blends may vary based on factors like regional regulations and vehicle compatibility.
Alcohol Fuel Characteristics and Values
| Characteristics | Values |
|---|---|
| Cost of production | Expensive |
| Power | Less than gasoline |
| Price | Affected by crude oil and gasoline costs, production costs, legal regulations, and transportation |
| Price comparison | As of June 2025, ethanol was $1.79 per gallon, while unleaded 87-octane gasoline was $2.37 |
| Ethanol content in gasoline | Most finished motor gasoline in the US is E10 (10% ethanol) or E15 (15% ethanol); E85 may contain up to 85% |
| Ethanol production | Requires grain, sugar, yeast, water, energy, fermenters, strainers, coolers, chillers, stills, boilers, hoses, clamps, and sanitizer |
| Engine impact | May be damaging due to water content; requires high-dollar filters |
| Fuel economy | Ethanol has 33% less energy content than pure gasoline, resulting in lower fuel economy |
| Alternative fuel prices | Can fluctuate based on location, time of year, and political climate |
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What You'll Learn
Ethanol is more expensive to produce than gasoline
Ethanol is a renewable, domestically produced alcohol fuel made from plant materials such as corn, sugarcane, or grasses. It can help reduce oil dependence and greenhouse gas emissions. However, ethanol is more expensive to produce than gasoline.
There are several reasons why ethanol is more costly to produce. Firstly, the production of ethanol involves significant costs for raw materials, equipment, energy, and manpower. Producing ethanol requires grain, sugar, yeast, water, fermenters, strainers, coolers, chillers, stills, boilers, hoses, clamps, sanitizers, and other resources, all of which contribute to the overall expense.
Secondly, the process of creating ethanol is less efficient than that of gasoline. Ethanol is about 20% less efficient than gasoline in terms of energy content, and blends with higher ethanol content can lead to even lower fuel efficiency in vehicles. This means that more ethanol is required to produce the same amount of energy as gasoline, driving up the production costs.
Additionally, the production of ethanol is subject to various regulations and standards, such as the Renewable Fuel Standard and the Clean Air Act. Compliance with these standards can increase the costs of producing ethanol. For example, ethanol must be denatured to make it unfit for human consumption, and federal law mandates a minimum of 2% denaturant by volume. The cost of the denaturant adds to the overall expense of producing ethanol.
The price of ethanol is also influenced by market factors, such as the cost of corn and gasoline. When corn prices are high and gasoline prices are low, the economic viability of ethanol is reduced. This can create challenges for ethanol producers, who may struggle to turn a profit when ethanol prices are not competitive with gasoline.
Lastly, government subsidies and tax credits can artificially change the price of ethanol, making it appear more affordable than it actually is. These financial incentives can mask the true cost of producing ethanol, which is inherently higher than that of gasoline due to the factors mentioned above.
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E85 is cheaper than racing alcohol
E85 is a blend of 85% ethanol and 15% gasoline. It has a higher octane rating than standard unleaded premium gasoline, with a rating of 100-115, compared to 87-93 for regular gasoline. This higher octane rating makes E85 more resistant to "knock", or preignition detonation, which can damage an engine.
E85's higher octane rating also means that engines can run higher compression ratios, which results in more power. This is because a higher compression ratio means that more fuel can be put into the cylinder compared to regular pump gas, which results in more power being generated.
E85 is also a good option for racing because it stores better than alcohol and is more resistant to spark advance than gasoline. It also runs cooler and reduces the risk of overheating.
The cost of E85 is typically just over $2 per gallon, while racing alcohol can cost upwards of $7 per gallon. This makes E85 a more cost-effective option for racing fuel, especially when considering the performance benefits it offers over racing alcohol.
In summary, E85 is a blend of ethanol and gasoline that offers higher octane ratings, better resistance to knock, and improved performance over standard gasoline. It is a cost-effective option for racing fuel, with prices typically around $2 per gallon, compared to the higher cost of racing alcohol.
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The price of ethanol is influenced by crude oil and gasoline costs
The price of ethanol-blended fuels is influenced by the prices of crude oil and wholesale gasoline. Crude oil market prices are historically volatile, and sudden market changes or shocks can cause rapid shifts in the price of crude oil and wholesale gasoline, which in turn affect the price of ethanol-based transportation fuels. For example, in June 2014, the refiner's acquisition cost of crude oil was $103 per barrel, but in April 2020, during the COVID-19 pandemic, crude oil prices dropped to $19 per barrel due to decreased global gasoline demand. By June 2022, prices had risen again to $114 per barrel.
The price of ethanol blends at the pump can differ in the short term compared to the long term. In the short term, market shocks and price fluctuations for crude oil and wholesale gasoline can be passed on to consumers differently than in the long term after markets have fully adjusted. For example, a 10-cent increase in the crude oil price can add about 4.2 cents per gallon to the E10 price in the long term, which is nearly half the increase of 8.3 cents when the same wholesale gasoline price increase is considered.
The demand for blended renewable fuels also plays a role in ethanol pricing. If demand is not high enough, blending targets may be reduced, as has been the case recently. Prices at the pump influence consumers' choices regarding ethanol-blended fuels, affecting the extent to which blending mandates are met.
Additionally, the price of ethanol is influenced by the price of gasoline because ethanol and gasoline can substitute each other as an energy source. Gasoline prices are determined by various factors, including refining costs, seasonal variations, regional differences, the type of crude oil used, processing technology, and the cost of other blended ingredients such as fuel ethanol. Gasoline demand typically increases during the summer, leading to higher prices. Federal, state, and local government taxes also contribute to the retail price of gasoline.
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Gasoline prices impact the appeal of alternative fuels
The price of gasoline has historically been volatile, with price spikes in 1974 and 1980 caused by the OPEC Oil Embargo and the Iran-Iraq War, respectively. The price of gasoline also peaked in 2012 due to high global demand and costly extraction methods. The economic recession caused a price crash in 2009, and prices dropped again in 2020 due to the COVID-19 pandemic. In 2022, prices reached a new high, impacting the appeal of alternative fuels.
The volatility of gasoline prices and environmental concerns has driven interest in alternative fuels such as ethanol, methanol, natural gas, and biogas. Ethanol, for example, can be made from corn or sugar, and it costs about $2 per bottle to make it at home. However, ethanol is 20% less efficient than gasoline and contains about 3.5% water, which can damage engines. The cost of ethanol fuel (E85) is slightly higher than regular gasoline, at around $3.09 per gallon, and it has a lower fuel economy.
The appeal of alternative fuels is influenced by their competitiveness with gasoline and diesel in terms of cost and performance. Alternative fuels tend to have higher costs in rural areas, but in urban areas with a natural gas network, natural gas can be more cost-effective than diesel and petrol for heavy vehicles and cars, respectively. The environmental impact of emissions can also be factored into the cost analysis, making alternative fuels more appealing in certain contexts.
The transition to alternative fuels also depends on vehicle costs and infrastructure. For example, flex-fuel vehicles can use ethanol-gasoline blends, but older vehicles may not be approved for blends with higher ethanol content. Overall, the volatility of gasoline prices and environmental concerns are driving factors in the exploration and adoption of alternative fuels, but there are also economic and technological considerations that impact their appeal and feasibility.
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Ethanol is cheaper to make from corn than sugar
The cost of a gallon of alcohol fuel varies depending on the type of alcohol used. For example, E85 fuel, which contains up to 85% ethanol, typically costs around $3.09 per gallon, while regular gasoline costs around $3.42 per gallon.
Ethanol can be produced from various feedstocks, including corn, sugar cane, and sugar beets. In the United States, most fuel ethanol is produced from corn kernel starch. This is because corn is abundant and cheaper to source than sugar. Corn is around $0.20 per lb., while sugar is approximately $0.50 per lb. Additionally, corn ethanol is a value-added product of existing feed production, which results in healthier and more productive feed for animals. This further reduces costs and provides additional benefits.
The production of ethanol from corn also has economic advantages. The corn lobby in the United States has influenced policies and subsidies that favour corn-based ethanol production. The US government provides financial incentives and supports the corn industry, making it more cost-effective for producers to use corn as a feedstock.
Furthermore, the process of producing ethanol from corn may be more straightforward and established than that of sugar. Brazil, for instance, has a more efficient process of producing ethanol from sugar cane, which is considered an advanced biofuel. However, the US has yet to adopt this process, possibly due to the availability and established infrastructure for corn-based ethanol production.
While corn-based ethanol may be cheaper to produce, it is important to consider its energy efficiency. Ethanol has approximately 33% less energy content than pure gasoline, resulting in lower fuel mileage. Additionally, the water content in ethanol can be damaging to engines, requiring the use of expensive filters to control damage. Therefore, while corn-based ethanol may be more cost-effective to produce, it may not be the most efficient or economical choice for consumers in the long run.
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Frequently asked questions
The price of alcohol fuel per gallon varies depending on the type of alcohol fuel and the region. As of June 2025, the rack price of ethanol, an alcohol fuel, was $1.79 per gallon in Nebraska.
Similar to gasoline, the price of alternative fuels like alcohol fuel can fluctuate based on location, time of year, and political climate.
The price of alcohol fuel is generally lower than gasoline. For example, in June 2025, the rack price of ethanol was $1.79 per gallon, while unleaded 87-octane gasoline was $2.37 per gallon in Nebraska.
The two most common types of alcohol fuel are methanol and ethanol. E85, a blend of gasoline and ethanol, is commonly found in the United States, particularly in the Midwest.
