Absolute Energy Launches Direct E85 Distribution to Retailers at $1.93 per Gallon

by Jim Lane (Biofuels Digest) In Iowa, Absolute Energy, a 115 million gallon per year ethanol plant near the Iowa-Minnesota border, is now offering E85, a fuel blend containing 85 percent ethanol and 15 percent gasoline, directly to retailers and is passing on the RIN value generated by blending ethanol. According to OPIS, recent prices for E85 at Iowa terminals were about $2.77 per gallon, while Absolute Energy listed the price for its E85 at only $1.93 per gallon earlier this week. READ MORE and MORE

Excerpt from Biofuels Digest (5/28/13): Now – why is that significant? With RBOB gasoline selling (wholesale) at $2.84 per gallon, according to CME group, for the July contract, the break-even between E85 and straight gasoline, based on energy density, is at $2.04.

Meaning that, assuming that retailers mark-up the fuels equally, Absolute Energy E85 customers will score a better deal than buyers of E10 or straight (E0) gasoline.

Overall, it’s a savings of 11 cents per gallon (in true energy density terms) for straight unleaded gasoline compared to E85. For cars that require premium gasoline – for which E85 is a perfectly acceptable substitute as it provides 100 octane fuel – the savings will be, on average, some 32 cents per gallon higher (according to AAA’s latest fuel price report).

...By contrast, according to OPIS, recent prices for E85 at Iowa terminals were about $2.77 per gallon. Meaning that blenders were pocketing up to $1.09 profit per gallon, and ensuring that E85 fuel was uncompetitive with regular gasoline. (This week in South Dakota, the prices for E85 range between $2.77 and $2.93 per gallon).

...By contrast — were every car in the US a flex-fuel car, and every gas station capable of delivering E85 fuel, and were E85 renewable fuels affordable, the blend wall moves to something around 100 billion gallons. Which is to say, a moot point. One of the very reasons that Congress didn’t think that the blend wall would be so vexing an issue when establishing the Renewable Fuel Standard in the first place – they were counting on E85 to take off.

But offering better fuel economy, in cost per mile, will go a long ways towards making E85, at last, a reality. As the US moves towards a goal of 52 mpg vehicles by 2025 — many scenarios point towards high-octane fuels to give the engines more fuel efficiency — making affordable E85 an even more important potential discussion point in the mix. Making this a trend to watch to see if it has market impact.

And someone at Absolute Energy ought to receive a “renewable fuel marketing” medal. READ MORE