Price is Ethanol’s Biggest Asset

The attributes of ethanol have long been touted as three-prong: Its production benefits rural America, its inclusion in gasoline lowers vehicle emissions, and it reduces our nation’s reliance on foreign oil.Those three E’s of ethanol—economy, environment and energy—still ring true. But a fourth key asset, the biofuel’s price advantage, may be its real strong suit. We report this month that the implementation of ethanol’s next ubiquitous blend, E15, and the proliferation of E85 pumps and flex-fuel vehicles (FFVs) hinges on ethanol’s low price relative to gas. 

In the March issue of Ethanol Producer Magazine, we learn that independent gas stations like Good & Quick in Nevada, Iowa, are whipping their larger competitors with broad offerings of lower-priced ethanol blends. EPM’s Chris Hanson reports in "The Curb Appeal of E15," that, despite regulatory hurdles and oil industry resistance, dozens of U.S. retail stations have put E15 under their canopies. Why? It’s lower priced and customers want it. 

This month’s cover story, too, drives home the point that all blends of ethanol must be attractively priced to gain further market penetration. The potential for E85 to be priced much lower than E10 and nonethanol gas is now a provocative issue. We report in “Weighting on the Line,” that too few Americans demand FFVs and the sole incentive for their production is being sapped. Without a regulatory incentive to produce FFVs, consumer demand for E85-capable vehicles will need to pick up in order for automakers to continue making them.  

So it’s clear that, like E10 and E15, creating market pull for E85 and FFVs is achieved with low pricing at the pump, along with an unmovable national commitment to biofuels that sends retailers and automakers the right signals. In “E85’s Pump Pros," we speak to Propel Fuels and Protec Fuel, two companies growing America’s access to ethanol’s highest retail blend. Each is experiencing rapid growth in high-population, FFV-dense markets. Both, however, are reliant on continued FFV production which—in a true chicken-or-the-egg dilemma—is reliant on E85 access and demand.

One of those original three E’s of ethanol—environment—does show up in this month’s issue. “In Defense of Ethanol” gives voice to ICM’s Steve Vander Griend, a formidable watchdog on ethanol emissions testing. His critical focus reminds us that continuing to prove ethanol’s overall emissions benefit supersedes other industry battles.