RFA: Consumers win with ethanol

By Renewable Fuels Association | November 08, 2017

Consumers have been saving money thanks to ethanol for years, but never as much as today. Nearly every consumer that chooses ethanol at the pump is saving money, whether using regular unleaded with 10 percent ethanol (E10), mid-grade with 15 percent ethanol (E15), or any one of the many flex fuel options like E85.

According to crowd-sourced data from the Renewable Fuels Association’s E85prices.com, the national price spread between regular unleaded and E85 has never been greater in the 17 years of tracking on the website. That price differential is currently at 33 percent for the month of November, or more than 8 percentage points higher than any other month in recorded history on the website. In many locations today—including California, Ohio, Iowa, Kentucky, Indiana and Illinois–E85 is at least $1 per gallon cheaper than E10. On average nationwide, flex fuel vehicle drivers who fill up with 20 gallons of E85 are saving $14 per tank over drivers who fill up with E10. Even when ethanol’s lower energy density is factored in, E85 costs less than E10 per mile driven.

The advantageous price scenario is due to the widening price spread between ethanol and gasoline, but also the strong value of renewable identification numbers (RINs) credits. In recent weeks, wholesale ethanol prices have been 15-20 percent below wholesale gasoline prices—the largest discount in more than two years.

Fuel blenders are further discounting the price of ethanol blends by passing along the value of RIN credits to retailers and consumers. Blenders capture the RIN credit when they blend ethanol with gasoline; they can then sell the RIN credit to other blenders or refiners and share some or all of the profit from that sale with retailers and consumers by marking down the price of the ethanol-blended fuel.

“This once again demonstrates the ability of ethanol to save consumers money, and proves the Renewable Fuel Standard and RINs are working to drive expanded use of cleaner, cheaper renewable fuels,” said RFA Vice President of Industry Relations Robert White. “The combination of various federal, state and industry infrastructure funding initiatives, along with the value of RINs, are allowing fuel retailers the ability to invest in infrastructure, while also passing along savings to the consumer. We are seeing tremendous growth in the availability of higher blends of ethanol at the retail level, and at a price point that will interest anyone looking to save money at the pump,” he added.

Ethanol detractors have claimed that RINs are a tax that negatively impact consumers, but the marketplace is showing otherwise. Those that have chosen to embrace the RFS are helping consumers daily.

“There are always stations that defy logic by charging more for E85 than unleaded, but those stations are becoming a rarity,” said White. “Most retailers are agnostic about what products they offer, as long as they have margin and volume. Right now, higher ethanol blends are offering a significant opportunity for blenders, retailers and consumers alike.”