E85 ethanol hits proverbial wall

My local paper has an article today entitled “E85 drives itself into ditch.”  Appearantly, people are finally beginning to realize that E85 is not the bargain that everyone is making it out to be.  At current pricing, it is actually more expensive to drive with E85 than with regular gas.  The main reason for this is the decreased mileage performance when running E85.

I personally would buy a flex-fuel vehicle, but only if the price of E85 were to drop significantly.  It most likely is the fuel of the near future or at least the three major Ethanol plants that are being built right now seem to think so.  Unfortunately, because of the lack of supply(or overwhelming demand) the market is crashing.  Many of the stations that carried E85 in North Dakota have stopped carrying it.

They are, in effect, causing the market they will need in the future to collapse. They are eroding consumer confidence in flex fuels. They are profiting in the short term at the expense of the long-term viability of the retail ethanol market.

Consumers want to buy E85. They want a clean, economical substitute for gasoline. They will buy flex-fuel vehicles if they can readily buy ethanol blends. But abuse customers and E85 retailers, as the industry appears to be doing, and it will be tough to win them back.

I think that goes a little far.  I really don’t think it will be all that tough to win the customers and retailers back.  In the coming years, E85 will become even more readily available.  As supply increases and demand stays level, the price should fall.  Those who have a flex-fuel vehicle will begin seeing a price advantage to buying E85 and will begin demanding it from retailers.  Que the upturn and E85 is popular again.  It just might be a few years yet.

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About Shane Ede

Shane Ede is an IT guy by day and a Entrepreneurial Blogger by night. You can follow him here on Thatedeguy or over on Twitter and Google+.

Comments

  1. Shane, you may be interested in this post I did a while back on E85.

  2. Thatedeguy says:

    Thanks Rob! That’s some great information and a fun test that you did. I think that until some of the issues like power, mileage, price get resolved we won’t see E85 go mainstream. Personally, I think that they are pushing it a little too hard and using the oil prices to do so.

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