One More Thing About Ethanol

The price spread between gasoline and ethanol. Credit: Reuters

Today, I reported that ethanol, despite losing its hype, is bigger than ever in the U.S. 

The chart above, from Reuters, shows one more reason people in the ethanol industry are optimistic. The chart shows the price difference between gasoline and ethanol. And, right now, according to Reuters, gas prices are at an all-time high compared to ethanol. A gallon of the biofuel is more than a dollar cheaper than gasoline.

Craig Hoppen, the president of J&H Oil Co. in West Michigan told me that this margin makes a big difference when people decide whether to pump E-85.

“Lately, as gas prices went up, we’ve sold a lot more [E-85], because it’s very price competitive today,” Hoppen said. “When the margin goes down … the volume drops accordingly.”

Hoppen says as of this month, E-85 sales are up about 50 percent at J&H Oil’s filling stations.

But still, E-85 only makes up about 1 percent of total sales. The U.S. Department of Energy reports that there were only about half a million E-85 capable vehicles on the road as of 2009.

That’s why the ethanol industry isn’t counting too much on E-85 for the future of the fuel.

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