E85 is not dependent on oil prices to a great degree. Unlike gasoline it should not see wild and huge gains in prices at the pump when oil goes up. Why is that E85 could be had for under $2.00/gallon in 2005 but at stations here it now costs $3.80 per gallon? Supply and demand? Yes and no.
As gas prices go up the demand for E85 goes up so its price goes up as well because the supply is limited. It's availability would not be as limited if not for the US farm lobby. They have lobbied successfully for policies which artificially depresses the available supply. This example of where the US farm lobby has influenced taxes, duties and subsidies to protect their interests to the detriment of the US consumer. If the USA could import much higher quantities of ethanol cheaply it might be viable and E85 would most certainly be much cheaper than it is. But.... ethanol imported into the USA for fuel has a import tax levied on it in order to make it non-competitive. This reduces the supply while fattening the wallets of those who have gamed and manipulated Congress.
If the US government was truly serious about more independence from oil rather than sucking up for the farm lobby's vote there would be no duties on imported ethanol.
How can the US farm lobby seriously think anyone informed is going to believe they give a rat's **** about fuel prices if they lobby for policies which help to keep alternatives priced higher? This is yet more illustration as why to ethanol, under current policy, is not a viable alternative. Next time a corn farmer tells you he feeds the world ask him if he's good enough to compete with the world....
Ken, it is rather frustrating how the price of E85 has jumped so much. It used to be that the price spread was 1 dollar or more, and with the recent spike in petro prices, it ought to be even bigger. But it isn't just the farm lobby that is causing what we see now. It is the petroleum industry that is causing the problem. The petro industry loves ethanol as long as it is in the 10% blend. They make obscene amounts of money from it. It is the petro industry that fights against imported ethanol. Why would they care ? Because if there were enough ethanol on the market for E85 to become more commonplace, the oil types would have to deal with people realizing that there are actual alternatives to their product. They would much rather keep selling folks the 10% blended stuff. There is an "ethanol subsidy benefit' thread on this section. Sadly, 99% of the filling stations out there have a franchise contract with one of the major oil companies. That contract specifies what products they can and can't sell in the store. It restricts advertizing of E85, and where the pumps for E85 have to be. When there are tax credits available for digging holes for new underground tanks, it is the oil companies that get that money, not the farmers. They also specify the price. At the stations that sell E85 around me, the price is always 50 less than regular. Reguardless of the price of corn bushels, the price for E85 tracks gasoline price perfectly. So, if oil is pricey, amd corn stays the same, the oil company and its franchise just makes even more profit. The bigger problem is the sugar lobby. And an even bigger problem is 'high fructose corn syrup'- people eat that stuff.......it is all part of the uSofA becoming a fascist nation. More and more of what is done and what is or is not allowed by our gov't is chosen by what is best for large corporations rather than the citizens of the nation.
Corn raw ingredient more than doubled, along with the petroleum necessary to farm it. Then there is the fuel to distill it. When ethanol is a negative-net-energy boondoggle, of course it is going to go up at least as much in price as gasoline.
The question of why the farmer's lobby is fighting against allowing ethanol into this country without charging tarriffs hasn't been answered. The farmers can point the fingers all they want at oil companies but they are fully entrenched in fighting off importation of alternative fuels. Its going to come back to haunt them and frankly I won't shed a tear when farmers complain about lossing their farm when the chickens come home to roost. HFCS, the farm lobby is to blame for that as well. Under Reagan the sugar cane growers fought for and won protection against imported sugar, making the use of HFCS much a much more viable alternative. As always, every time a group screams how the government needs to protect their business they do it to the detriment of the consumer and unintented consequences eventually ripple through their industry and others as well.
Currently the oil lobby is fighting ethanol, not pushing it. Anyone pay attention to the Texas governor lately?
Same thing as man made racing fuel, the price goes up.. BECAUSE THEY CAN. same reason the dog licks himself!!
Their costs go up slightly but not 200% in a few yrs.
The government would allow you to make your own biodiesel and water for fuel conversions and patent them for the smart guys that developed this technology if they really cared about the environment.
Their wallets are first and the environment is on the list somewhere but not first by any means..