US gas prices top $4 a gallon, AAA says

AAA reports that the average price for gasoline in the US topped $4 a gallon for the first time, reaching $4.005. More pain at the pump is expected after oil jumped $11 a barrel on Friday on weakening of the US dollar and increase in Middle Eastern tensions. OPEC said that it did not expect to increase production to ease prices. Gas prices at the pump at up from $3.10 one year ago, or 29 percent.

AAA is also reporting the effective cost per mile of E85 is 8 percent higher than the cost per mile for gasoline. Though E85 sells for 18 percent less than gasoline, AA is factoring a 32 percent loss of mileage into its estimates.

The Iowa state Renewable Fuels Association said that E85 sales increased 48 percent in the 3rd quarter of 2007, compared to the corresponding quarter in 2006. Total sales for the quarter were 941,547 gallons from 68 E85 stations. The figures, which represent 154 gallons per day per station, continue to underline a lack of appeal of E85 among drivers, although Iowa’s station owners increased E85 availability in the fourth quarter to 79 stations.

Even in Iowa, E85 is tough to find, and the general manager of the East Central Iowa Cooperative said “I don’t think flex-fuel even passes through someone’s head when they are buying a vehicle around here”. The sales manager of a Waterloo, IA Chevrolet dealership said that rising flex-fuel vehicle numbers are “mostly a coincidence”.

In Pennsylvania, fuel marketer Sheetz recorded a 50% drop in sales at pumps converted from gasoline to E85. Sheetz spent more than $150,000 last year on E85 conversion at three locations in Western Pennsylvania.

Part of the problem is a poor cost-benefit performance. A new cost-benefit analysis by researcher John Graham at the Pardee Rand Graduate School found that E85 scored the worst among all fuel options. Diesels performed the best, saving $2300 over a vehicle’s lifetime compared to regular gasoline. Hybrids were a close second, while E85 cost $1600 for fuel over vehicle lifespan. The study’s authors did not disclose the mileage standards used in the study, or the vehicles studied.

As a result of E85’s difficulties, Iowa Senator Chuck Grassley recently called on President Bush to direct the Environmental Protection Agency to approve E15, E20, E30 blends. Grassley said that with E85 not gaining acceptance, the US had to find other ways to ensure a market for higher blends of ethanol.

In support of Grassley, the American Coalition on Ethanol presented findings on research showing that cars running on E20 and E30 blends achieved better mileage than cars running 100 percent conventional gasoline. Scientists at General Motors, whose cars were involved in the test, were unable to explain how the ethanol blend, which contained 6 to 11 percent less BTUs, could get better mileage. In the tests, a Chevrolet Impala flex-fuel vehicle running E20 achieved 15 percent better mileage than when running 100 percent gasoline. Tests were also conducted on Toyota vehicles.

E20 efforts are on the rise on many fronts. USDA Under Secretary for Rural Development Tom Dorr, speaking at the NAFB’s Trade Talk event, told the Brownfield Network “Everybody that wants to invest has to have assurance that we can get past this E10 blend wall. The Department of Energy … and EPA are aggressively pursuing how to get to …. E15 or and E20.”

Free Subscription to the Daily Biofuels Digest e-newsletter

Related Stories

Ethanol holding gas prices down by up to 9 cents per gallon

The American Coalition for Ethanol said that cost of gasoline is between 6 and 9 cents per gallon lower because of the impact of ethanol.  In related news, Blue Ridge Biofuels said that biodiesel p...

Gasoline, ethanol prices begin to fall

Gasoline prices began dropping across the country this month as post-Labor Day drops in demand begin to be felt. The drop in Michigan was 14 cents per gallon from highs recorded over Labor Day weekend...

Gasoline, ethanol prices drop; gas now down 9 percent from July high

According to AAA, gasoline prices have now dropped from a July 16 peak of $4.114 per gallon to $3.717 after 24 consecutive days of declines. The 9 percent drop compares to the 22 percent drop in crude...

Ethanol, corn prices to stabilize in 2009 after corn shock 2008, analyst projects

Raymond James analyst Pavel Molchanov, in a note to clients, has projected ethanol prices to average $2.42 and $2.48 per gallon in 2008 and 2009 respectively, while projecting corn costs at $5.48 and ...

Report says increased ethanol mandates will drive gas prices up as much as $1 per gallon

In Washington, oil industry think tank The Energy Policy Research Foundation has published a report warning against the consequences of increasing ethanol blending above E10 levels. The report, which ...

American Farm Bureau, consulting firm say ethanol holding gas prices down 10 cents per gallon

A report by consulting firm LECG concluded that drivers are saving an average of 9.8 cents per gallon on gasoline, owing to the ethanol mandate, while the American Farm Bureau Federation released a re...