50% drop in per-pump fuel sales with switch from gasoline to E85: What Gives?
This week, it has been widely reported that General Motors and Sheetz, a Pittsburgh-area fuel retailer, have been collaborating on E85 promotions. Sheetz in Monroeville this week offered 85-cent ethanol as a promotion, as a part of the GM E85 Fuel for Thought Tour taking place across the country this fall. Ethanol regularly sells in the area for $2.40, as opposed to $2.79 for regular unleaded.
Sheetz said that it experienced a 50% drop in sales at pumps converted from gasoline to E85. Sheetz spent more than $150,000 this year on E85 conversion at three locations in Western Pennsylvania.
“The story about Sheetz was surprising and disturbing,” commented Tim Curtiss, former CEO of biofuel refiner Liquid Resources. “E-85 should be incredibly cheap RIGHT NOW because the wholesale cost of a gallon of E85 should be around $1.12. E85 should be available and profitable at around $1.95-2.00 per gallon. $2.40 for E85 in a $2.79 E10 market isn’t cheap enough.
The Renewable Fuel Association projects a 10-15% loss in fuel efficiency with E85 compared to unleaded gasoline, which suggests that Sheetz is pricing ethanol at an equivalent price based on cost per mile. The result suggests that E85 should be marketed at an additional discount.
