Ethanol - A new battle brewing?

MHarryE · Dec 9, 2015

Subsidized fuel depends on where you live. Driving across Iowa last Friday, I had my choice of filling with 97 octane ethanol free at $2.179 per gallon or 97 octane with ethanol for $1.779. To me it's a no brainier because driving exclusively in the Midwest (MN, IA, MO, and WI) the past 15 years I have used fuel with ethanol 100% and have had no fuel system related problems. Also listening to a farm show on an Iowa radio station Friday, the discussion centered on how many Iowa farmers would be put out of business without the Iowa ethanol subsidy. After all, today's wholesale market price was $1.26 per gallon for gasoline and $1.35 per gallon for ethanol. In Minnesota, unleaded fuel is allowed only in off-highway, collector vehicles, and vehicles 25 years old or older. The price differential for this fuel, which I do use in my chain saw and garden tiller, is normally an additional 50. cents per gallon.

In the Iowa talk show they stated the subsidy is only for ethanol produced from corn. Discussion was that ethanol from any of the other many materials from which ethanol can be produced does not benefit Iowa farmers.

As the Iowa subsidy is a state subsidy, I thank the Iowa residents paying for the subsidies every time I fill up in the state. Sure, it's not much, but if I buy 12 gallons and the Iowans are paying 40 cents per gallon of my fuel cost, I have enough money left to stop by Starbucks and pay an inflated price for a cup of coffee.

Copperhead · Dec 9, 2015

Probably where a lot of the 10 cent a gallon fuel tax increase this year in Iowa is going. But I am going to have to pay the fuel tax anyway, so I take advantage of the lower cost of using E15 right now. Big enough spread that it is worth it. I have never argued that there isn't any state goofiness going on, only that federal subsidies were eliminated.

My bet is that ethanol free actually has a price premium to it that gets cost shifted over to the ethanol laced gasoline if there is some subsidy stuff going on. Ethanol free is priced way too high while ethanol blends are priced about right compared to the market pricing. Ethanol free should be at the same or lower than ethanol blends right now. So while it appears that Iowans are paying a ethanol subsidy, I would contend those who are using ethanol free gas are the ones who are getting taken to the cleaners. Iowa allows ethanol free all over the place, both regular and premium, but one does have to pay quite a bit for it. Iowa is just taking advantage of the sky is falling, ethanol is the death of mankind crowd and pricing pure gas accordingly. I do get some ethanol free occasionally for some small engine stuff, but ethanol blends are all that have gone into my autos and pickups since the late 70's.

So as opposed to a subsidy thing going on, it is probably more of a surcharge thing when it comes to non ethanol gas. But if one wants to pay much more than market price for non ethanol gas, and in turn call it a subsidy for ethanol, I could care less. But one is going to have to really stretch things to show that $2.18 a gallon for non ethanol gas is really a fair market price when gas is closed on the trading market at $1.21 yesterday. Normal state and federal fuel taxes do not amount to $1 in Iowa. So it is the pure gas folks that are getting "hosed", not the ethanol gas users or Iowans in general. That cost difference you saw was all surcharge on ethanol free, not a subsidy of ethanol blend.

Copperhead · Dec 9, 2015

Double post

oldpilgrim · Dec 9, 2015

Get ready for $2 gasoline again

Gasoline futures bumped higher early last week after the U.S. increased the amount of ethanol required to be blended into the fuel next year.

Copperhead · Dec 15, 2015

Was in Elk Point, SD yesterday. E85 $1.45 a gallon.

Creamer · Dec 15, 2015

Funny how the price goes up and down with gasoline. It is not significant enough to create its own market.

TomSeller · Dec 15, 2015

Creamer said:
Funny how the price goes up and down with gasoline. It is not significant enough to create its own market.

Exactly. Because it exists only to degrade gasoline at the taxpayer's expense. Government farmer's welfare handout. I like corn as a food, not in my gas.

Copperhead · Dec 16, 2015

Well, it does have a certain following or the retailers would not stock it. There is no requirement to carry E85. Stations decide that on their own. There are some who will buy it simply because they can. I only buy it when the price spread makes it cost effective in proportion to the mpg loss of the fuel. I was in SD on business, so I didn't buy any at the price I stated in the last post. But based on the price spread, if I lived in that area, I would be filling up with E85. It just doesn't have a market with those that don't want to use it. I have no desire to use a lot of different things, but they still have their own market following. E85 is in that same class. Some folks use it frequently and have no qualms in doing so. Others seem to have seizures with the idea of ethanol in fuel and the mere thought of E85 causes apoplexy. Each can go their own way. No one is forced to buy E85.

tractorshopper · Dec 17, 2015

Our only options are E-10 or regular E-Free. E-Free was about 10% higher when gas was up near $3/gallon, but now that it is lower, E-free is a higher percentage above that now. At 10% price difference, I buy only E-Free. My truck gets better mileage that offsets a lot of that and frankly it just runs so much better and makes a lot more instant power. My car is newer and doesn't seem to notice as much.

When E-10 was pushed on us, I went through power tool after power tool in no time flat until I figure out the ethanol issues. Now I won't put any E gas in my small engines. In fact, most of the small engines I have bought specifically say not to use it including my Honda engine on my pressure washer which is my newest purchase. I also went to straight gas in my lawn tractor and it has run much better ever since.

jix · Dec 17, 2015

tractorshopper said:
Our only options are E-10 or regular E-Free. E-Free was about 10% higher when gas was up near $3/gallon, but now that it is lower, E-free is a higher percentage above that now. At 10% price difference, I buy only E-Free. My truck gets better mileage that offsets a lot of that and frankly it just runs so much better and makes a lot more instant power. My car is newer and doesn't seem to notice as much.

When E-10 was pushed on us, I went through power tool after power tool in no time flat until I figure out the ethanol issues. Now I won't put any E gas in my small engines. In fact, most of the small engines I have bought specifically say not to use it including my Honda engine on my pressure washer which is my newest purchase. I also went to straight gas in my lawn tractor and it has run much better ever since.

Yup: I just bought a new generator for home standby Becoz my old one was carb gummed and it could not be cleared.
I made a decision after fighting chainsaw fuel issues that were expensive.
Now it is my policy: I will not use ANY ethanol fuel in a small engine, nor in my boat engine/
I Canada Premium gas is about 45 Cents an imperial gallon more than E 10. Worth it to avoid the many issues with ethanol in stored gas,, gummed carbs destroyed rubber hose, etc. I like the higher octane performance in my 2 strokes, too, especially my chainsaws. Lower octane gas burns out pistons in hardwood bucking on hot days.

Jix