Rajan Wilcox
E85 fuel, which is gasoline blended with up to 85% ethanol, tends to be more expensive than regular gasoline. In the United States, E85 fuel sells for around 0.20 to 0.30 dollars more per gallon than regular gasoline. However, the price of E85 fuel can vary depending on location, time of year, and political climate, and it has recently become more competitive with regular gasoline in some regions, particularly in the Midwest, where most U.S. ethanol is produced. In Australia, United has a monopoly on the sale of E85 fuel, which has resulted in higher prices for consumers. The cost of producing E85 fuel is influenced by factors such as corn subsidies, the price of ethanol feedstock, and the price of crude oil.
| Characteristics | Values |
|---|---|
| Retail price | $3.56 per gallon as of October 1, 2024 |
| Price compared to regular gasoline | $0.20-$0.30 more per gallon than regular gasoline |
| Lowest recorded price | $2.28 per gallon in April 2020 |
| Composition | 85% ethanol, 15% gasoline |
| Energy content | 25% less energy per gallon than regular E10 gasoline |
| Price determinants | Ethanol production costs, price of crude oil, and RINs |
| Regional price variation | Lowest prices in the Midwest, highest in Australia |
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What You'll Learn
E85 fuel prices in the US
E85 fuel is an 85% ethanol fuel blended with gasoline. In the US, E85 fuel tends to sell for around $0.20 to $0.30 more per gallon than regular gasoline. The lowest fuel prices were recorded in April 2020, at the height of the pandemic-induced oil crisis, when the E85 fuel price was $2.28 per gallon. By October 2024, the retail price had risen to $3.56 per gallon.
Several factors affect the price of E85 fuel in the US. Firstly, the cost of production can impact the price, with some arguing that it is costly to produce. For example, in the case of ethanol production from corn, there are additional costs associated with farming the corn, which can reduce the environmental benefits of using E85 fuel. Additionally, the demand for E85 fuel can influence pricing. If there is insufficient demand to make economies of scale viable, the price per unit may increase.
The price of E85 fuel can also be influenced by the price of regular gasoline. As gasoline prices increase, alternative fuels like E85 become more appealing to vehicle fleet managers and consumers. However, the difference in price between E85 fuel and regular gasoline has varied over time. For instance, the price discrepancy was greater in 2022 than in previous years.
It is worth noting that E85 fuel prices can vary based on location and the time of year. Additionally, factors such as government subsidies and competition among fuel suppliers can also impact the price of E85 fuel. For example, in Australia, a company called United has a monopoly on the E85 fuel market, allowing them to charge higher prices.
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E85 fuel prices in Australia
E85 fuel is a mix of regular unleaded petrol and bioethanol, which is derived from plant sources or animal waste. The number 85 in E85 refers to the percentage of bioethanol in the fuel, which can range from 70% to 85%. E85 fuel is designed for high-performance cars and is more environmentally friendly than regular petrol, producing lower emissions.
In Australia, E85 is an uncommon fuel type compared to unleaded and premium unleaded alternatives. It can usually be found at certain United Petroleum service stations across the country. E85 fuel is priced at around 20 cents per litre lower than regular 91 unleaded, though prices can vary depending on location. At the time of writing, E85 was priced at around 160 cents per litre, which is almost 30 cents more than premium 98 fuel from the same service station.
The limited popularity of E85 in Australia can be attributed to the small number of vehicles that can utilise this fuel type. Models that can run on E85 include Holden's flex-fuel VE Series II Commodore, Saab 9-3 and 9-5 Biopower models, Chrysler's Sebring sedan, and certain Dodge and V8 supercar models. However, Saab and Dodge are no longer sold in Australia, and the other models have been phased out.
Due to the low demand for E85, the supply is limited, resulting in higher prices. Additionally, as E85 fuel has a lower energy content than pure petrol, vehicles using this fuel type may experience higher fuel consumption, offsetting some of the environmental benefits.
Despite these considerations, E85 has found a niche as a race fuel, with iconic V8 supercars in the Bathurst 1000 and the IndyCar series in America relying on E85 to power their high-compression engines.
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E85 fuel prices in the Midwest
E85 fuel is a blend of 85% ethanol and gasoline. In the United States, E85 fuel tends to sell for around $0.20 to $0.30 more than regular gasoline per gallon, with prices ranging from $2.28 per gallon in April 2020 to $3.56 on October 1, 2024.
In the Midwest, E85 fuel prices have been declining and are often lower than in other parts of the country. This is because the Midwest produces most of the United States' ethanol, resulting in relatively low wholesale ethanol prices. As a result, E85 fuel prices in the Midwest are sometimes close to price parity with regular gasoline on an energy content basis.
The pricing of E85 fuel relative to gasoline depends on ethanol production costs, which are influenced by the price of ethanol feedstock (mainly corn), and the price of crude oil, which impacts gasoline prices. In addition, under the Renewable Fuel Standard program, producers and importers of gasoline are required to acquire renewable fuel credits (RINs), which are generated during renewable fuel production. Since the production of E85 generates more RINs than the standard E10 blend, the extra RIN value is passed along as a price discount, making E85 more competitive with regular gasoline.
While E85 fuel prices in the Midwest are generally lower than in other regions, specific prices can vary within the region. For example, in Illinois, E85 fuel prices at various gas stations in Effingham ranged from $2.75 to $2.81 per gallon, according to reports from 2018 to 2019. These prices may not reflect the current rates and can fluctuate over time.
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E85 fuel prices compared to gasoline
E85 fuel is a blend of 85% ethanol and gasoline. In the United States, the retail price of E85 fuel stood at $3.56 per gasoline gallon equivalent on 1 October 2024. This is around $0.20 to $0.30 more expensive than regular gasoline, although the price difference was greater in 2022. The lowest recorded price for E85 fuel was $2.28 per gasoline gallon equivalent in April 2020, during the pandemic-induced oil crisis.
In Australia, one user on Reddit reported that E85 fuel was 70 cents per litre, which was much cheaper to run than their wife's car. However, another user commented that E85 fuel is no longer worth it due to its high price and limited availability.
The price of E85 fuel relative to gasoline depends on several factors, including the production costs of ethanol, which are influenced by the price of ethanol feedstock, mainly corn. In the United States, corn subsidies have kept the production costs of ethanol low, making E85 fuel cheaper to produce and, consequently, more competitively priced compared to gasoline.
In recent months, the retail price of E85 motor fuel has decreased in several Midwestern states in the United States, bringing it closer to price parity with regular gasoline on an energy content basis. This means that drivers with flex-fuel vehicles (FFVs) can achieve similar mileage per dollar with E85 as with E10 gasoline, which is the main blend used in vehicles. However, due to its lower energy density compared to E10 gasoline, consumers using E85 may need to refuel more frequently and travel farther to reach stations that offer E85 fuel, as they are less widespread.
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Factors influencing E85 fuel prices
The price of E85 fuel is influenced by various factors, including production costs, market demand, energy content, and competition. Here are some key factors that impact the pricing of E85 fuel:
Production Costs
The cost of producing E85 fuel is influenced by the price of its feedstock, which is primarily corn. In the United States, corn subsidies have kept the production costs of ethanol relatively low compared to other countries, where feedstocks like switchgrass and sugarcane are used. The price of crude oil also affects production costs, as gasoline prices are largely driven by the cost of crude oil.
Market Demand
E85 fuel is considered a substitute for conventional gasoline. When the supply or cost of conventional gasoline is affected, such as during a supply shock, the demand for E85 can increase. This increased demand can lead to higher prices for E85 as more consumers bid for the same amount of fuel.
Energy Content
E85 fuel typically has 85% ethanol content, which has a lower energy content per gallon than gasoline. As a result, consumers may achieve lower miles per gallon with E85 fuel. This lower energy content has historically made E85 more expensive on a per-mile basis, even when it had a lower price per gallon.
Competition and Availability
The availability and competition among retailers also influence E85 fuel prices. In some regions, such as the Midwest in the United States, E85 fuel is more widely available and competitively priced due to the region's ethanol production and wholesale prices. In other areas, a single company may have a monopoly on the market, allowing them to set higher prices without direct competition.
Taxation
The taxation policies on fuel can also impact E85 prices. E85 fuel is often taxed less heavily than gasoline, making it more cost-effective for consumers even when the price per gallon is lower for gasoline.
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Frequently asked questions
The retail price of E85 fuel in the United States was 3.56 US dollars per gasoline gallon equivalent on 1 October 2024. E85 fuel tends to sell for around 0.20 to 0.30 US dollars more than regular gasoline.
The pricing of E85 fuel depends on ethanol production costs, which are driven by the price of ethanol feedstock (e.g. corn), and the price of crude oil, which affects gasoline prices. E85 also has up to 25% less energy per gallon than regular E10 gasoline, so it needs to be discounted for consumers to achieve the same mileage per dollar.
E85 fuel is most cost-effective in the Midwest, where most US ethanol is produced, resulting in relatively low wholesale ethanol prices. In recent years, E85 prices in the Midwest have brought the fuel close to price parity with regular gasoline on an energy content basis.
