Is Ethanol Economical? A Financial Look at Ethanol's Impact on Consumers at the Pump

Because the energy content of ethanol is less than that of gasoline, it will cost more to drive the same distance using ethanol fuel than it will using gas, unless the price of ethanol fuel drops significantly.

Understanding the proportions of ethanol to gasoline in ethanol fuels is integral to understanding each fuel's energy content, efficiency, and relative cost. Specially equipped vehicles run on E85, which is a mixture of 85 percent ethanol and 15 percent gasoline. However, average vehicles can run on 90/10, which is a mixture of 90 percent gasoline and 10 percent ethanol.

How Does Ethanol Fuel Compare to Gasoline in Energy Content?

Ethanol contains less energy than gasoline. According to the Environmental Protection Agency, gasoline has approximately 115,000 Btu/gal, and ethanol has approximately 75,500 Btu/gal. Therefore, ethanol contains 66 percent of the energy of gasoline. Consequently, gasoline, 90/10 and E85 have different energy contents. The energy content of 90/10 is 96.6 percent of gasoline’s energy content, and E85 has 70.8 percent of gasoline’s energy content.

How Does Energy Content Affect Fuel Efficiency?

If an automobile gets an average of 25 mpg on regular gasoline, it will get 24.15 mpg using 90/10 fuel. A specialized vehicle will get 17.7 mpg using E85 fuel, all other factors being equal.

How Does Fuel Efficiency Affect the Wallet?

Suppose the price of gasoline is $4 per gallon. The price of 90/10 must be $3.86 per gallon at the pump to break even on a tank of gas, and less costly to make the purchase economically beneficial to the buyer. The price of E85 must be $2.83 per gallon to break even.

How Far Will a Tank of Fuel Go?

A 16 gallon tank in a car that gets 25 mpg will go 400 miles on one tank of gas. The same tank will only go 386 miles on 90/10. So, 16.6 gallons of 90/10 are needed to make the same car go the 400 mile distance. The tank will last 283 miles on E85, and 22.6 gallons of E85 are required to make the car go the same distance.

What is the Difference in Cost per Trip?

Assuming that gasoline and ethanol fuel both cost the same amount per gallon at the pump, which they currently and generally do, let’s say a gallon of either fuel is $4. It will cost $64 to fill up the tank on gas, resulting in a 400 mile trip. It will cost $66.40 to fill up for 400 miles on 90/10, and $90.40 to fill up on E85 to go the same distance.

What is the Difference in Yearly Cost?

Considering that the average mileage a car accumulates in one year is 15,000 miles, someone using gasoline at $4 per gallon will spend $2,400 per year on fuel. Someone using 90/10 at the same price will spend $2,485 a year on fuel, and someone using E85 at the same price will spend $3,390.

Motorists must weigh the pros and cons of ethanol fuel, and determine whether it is worth their resources to spend the extra $85 or $990 per year on ethanol fuel in exchange for the possible environmental and national security benefits of using ethanol fuel rather than petroleum based gasoline.

Jun 7, 2008 1:11 PM

Barbara Pytel :

Allison,
Well written and well covered. Being a lifetime resident of Iowa, corn production and ethanol are something I've grown up understanding. I would like to make one point. We, humans, don't eat the field corn that is raised for ethanol. Sweet corn is a different variety with a longer "milk" stage allowing us to harvest it and eat it before it becomes hard like field corn. Field corn is used for animal feed and sweeteners, however. So, it will drive up food prices through the back door as it pertains to livestock feed and processed foods.
For generations, I have watched small farmers go under because the cost of production for corn, beans, hogs and cattle was more than market prices. Farmers are at the mercy of the markets and can't set a price for their products. Not too many years ago, corn prices were the same as during the Great Depression. No wonder farmers couldn't make ends meet. Ethanol has driven prices up, yes. But, farmer's deserve to get more for their hard work than prices set in the Great Depression. We have been lucky that the proud American farmer has been willing to work for $1 and $2 per hour for generations to put food on our tables. Many could hardly afford to put food on their own tables because they were so good at feeding the world.
I hope alternative fuels (biodiesel, wind, ethanol, solar, battery) are finally going to be a priority instead of depending on unstable governments to solve our energy needs. Let's not see corn and bean prices rising as a bad thing. Let's see it as the American farmer finally being compensated for a century of hard and efficient work.