Is the Price Right?
Tuesday’s USA Today had an article on how expensive E85 is compared to full fledged gasoline or 10 percent ethanol blends that might have given some ethanol proponents heartburn. But, it is indeed a fact that E85 currently does cost more in most areas unless the retailer chooses to make it less expensive for promotional reasons. And the article rightly notes that the main reason for the higher price has been higher demand driven by refiner needs for ethanol to replace MTBE. And the article also rightly notes that E85 has about 72 percent as much energy as conventional gas. So, the conclusion is that if gas costs $2.286 per gallon, the price of E85 should be 72 percent of that or $1.646 per gallon. That makes sense and it’s possible that will someday be the actual case.
But, I had a little conversation about this yesterday with Tom Slunecka, executive director of the Ethanol Promotion and Information Council, who pointed out that the benefits of ethanol to the environment, to the economy and to the domestic security of the country are intangibles that add to the value of ethanol.
“Consumers need to be purchasing ethanol more on its value and less on its price. And now more than ever, they need to be committed to making a change in philosophy as to what fuel they are choosing to put in their vehicles,” Slunecka said.
And that is also true.
3 Comments »
Gary Dikkers
I’m glad Tom Slunecka included the word “intangibles” because there is little tangible proof that corn ethanol does the three things he said.
The only one I wouldn’t argue with is the benefit to the farm economy. A market forced through tariffs, mandates, and tax incentives could only benefit corn farmers.
When you have the chance, please ask Tom how corn ethanol contributes to domestic security when its production is absolutely dependent on imported nitrogen fertilizers made from foreign natural gas.
The subject of whether corn ethanol harms or hurts the environment is also arguable. While ethanol may burn cleaner at the point of combustion, corn ethanol supporters such as EPIC rarely discuss the adverse effect on the environment of the run off from the massive amount of fertilizers, fungicides, herbicides, and pesticides needed to achieve large corn yields.
Cindy
(Gary’s comment was edited for length and repetitiveness.)
I wish you would focus on the big picture, rather than just “corn” ethanol. Ethanol can and will be made out of other things as soon as the technology is improved. We’ve been over this already – corn was the most efficient way to get ethanol production started.
As to the “adverse effect on the environment of the run off from the massive amount” of farm chemicals and fertilizer …The amount of farm chemicals and fertilizer used per acre in this country has been declining in recent years because, in most areas, farms are under strict environmental guidelines regulating run-off. Farmers are the number one stewards of our natural resources. It does them no good to pollute the land and water from which they derive their living.
Gary Dikkers
The price may or may not be right, but all energy companies could do consumers a big favor by pricing their product by energy content instead of by volume.
For example, where I live E85 now costs $1.92 per gallon, while unleaded regular costs $2.21. E85 sounds like a bargain, doesn’t it? Unfortunately, it’s not.
* If I buy E85, 100,000 Btu costs $2.35.
* If I buy unleaded regular, 100,000 Btu costs $1.92.
The corn ethanol industry too often deceives people by claiming E85 costs less than gasoline. While that may be true per gallon, volume is not what counts. What counts is energy content.
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