Indiana Economic Digest | Indiana
Advanced Search

• Most Recent

home : most recent : statewide implications August 15, 2018

5/29/2018 12:30:00 PM
With gasoline prices rising, is more ethanol the answer?

Dave Taylor, Tribune-Star

The recent spike in gasoline prices has been tempered by the use of ethanol, and the future may see greater use of the corn-based product, according to some in the renewable fuels industry.

“If you look at futures prices, you’ve got ethanol trading at around $1.50 [per gallon] and gasoline at $2.20,” Eric Mosbey, general manager of Lincolnland Agri-Energy in Palestine, Illinois, said. “The more ethanol we can use the more it’s going to lower gas prices.”

Federal standards adopted following passage of the Energy Policy Act of 2005 require a minimum volume of renewable fuels.

E10, a mixture of 90 percent gasoline and 10 percent ethanol, has become nearly universal.

Some stations, including certain Meijer, Speedway and Thornton locations, offer higher blends up to E85, which actually contains up to 83 percent ethanol. Much touted by the industry and political leaders when the renewable fuel standards were set, the use of E85 remains limited.

About 20 million flexible fuel vehicles in the U.S. can safely use E85 but that’s fewer than 10 percent of the nation’s passenger cars and light trucks.

Ethanol is touted as cleaner burning than gasoline and it has a high octane rating of 113, meaning it is more powerful, and it is favored by many drag racers. But E85 must be used in designated vehicles and even then miles per gallon will suffer.

“You have to look at the cost difference between the two fuels,” said Tom Moore, owner of Sir Thomas Automotive in Terre Haute.

In regular trips to Indianapolis in his Chevrolet Suburban, Moore averages up to 20 miles per gallon with regular gasoline (E10) but no more than 17 mpg when using E85.“Sometimes it doesn’t run quite as well. That’s the biggest difference that people have to realize,” he said. “Some people may never notice it.”

The advice from Moore, an automotive technician, is for flex fuel owners to do the math and try a tank or two of E85.

He cautious, however. That alcohol absorbs moisture, so vehicles should not be parked for a long time with a lot of fuel in the tank.

E85 was recently selling for $2.29 per gallon at Terre Haute Speedway stations offering the fuel, $2.34 at Meijer and $2.49 at Thornton’s. Regular gasoline was $3.09 at most locations.

U.S. production of ethanol increased from 14.3 billion gallons in 2014 to 15.8 billion in 2017, according to the Renewable Fuels Association.

The recent gasoline price jump does not appear to have made ethanol more popular. It accounted for 10.6 percent of gasoline demand for the week ending May 18, down from 11.5 percent in January.

Weekly production for the week ending May 18 was about 43.2 million gallons compared with 43.7 million for the week ending January 26.

A spokeswoman for Marathon Petroleum Corp., which owns the Speedway convenience store chain, said she could not comment on sales figures. A representative of Thornton’s did not respond to a request for comment.

Use of ethanol is good for business in the Wabash Valley. Lincolnland Agri-Energy buys corn from area farmers and produces 60 million gallons of biofuels (ethanol and biodiesel) annually, according to its website.

Another company, POET biofuels, has a plant in Cloverdale that is capable of producing up to 92 million gallons per year. “E85 is an exceptional value at today’s prices,” said Mosbey, “but the industry will focus more on E-15 and ‘mid-level blends’ in the future.” The EPA has certified E15 for use in vehicles manufactured since 2001, and most automakers approve use of the fuel in newer vehicles.

The auto industry is concerned about meeting higher fuel economy standards and tighter emission standards while providing the power Americans have come to expect.

The solution Mosbey sees is more ethanol. “With ethanol you can provide higher octane for less money. Engines can be designed to do even better than they are today on ethanol fuels,” he said. “Fuel producers, automakers and retailers will need to work together to offer the best value to consumers: high quality, clean burning, inexpensive fuel that provides the performance that consumers need. Ethanol delivers all three and can be a big part of the solution.”

Related Stories:
• Indiana sees largest year-over-year gasoline price hike of 30 percent
• Gasoline prices stay high, expected to stand still through summer
• Some northern Indiana fields flooded, but USDA reports majority of crops planted

2018 Community Newspaper Holdings, Inc.

Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

Software © 1998-2018 1up! Software, All Rights Reserved