E85 sales to at least double in the next decade — report

Source: Amanda Peterka, E&E reporter • Posted: Thursday, November 13, 2014

Sales of gasoline tailored for flex-fuel vehicles will at least double by 2023, according to a report released today.

During the same time, however, sales of E85 could increase as much as twentyfold, depending on the price of the fuel relative to regular gasoline and the rate at which automakers produce flex-fuel vehicles, the report from the National Association of Convenience Stores’ Fuels Institute found.

E85, gasoline containing up to 85 percent ethanol for use in flex-fuel vehicles, is widely seen as a potential means for increasing the amount of ethanol sold in the United States and meeting future renewable fuel mandates.

“We developed this report in direct response to requests from multiple congressional committees to provide a comprehensive source for information about the market for E85,” Fuels Institute Executive Director John Eichberger said in a statement. “This objective analysis of E85 in the market and the range of its market potential is essential to provide guidance regarding the potential for E85 to meet the goals of the renewable fuel standard.”

Up to now, E85 uptake by drivers has been hampered by disconnects between where flex-fuel vehicles are located and where E85 is sold at gas stations.

As of January, there were 14.2 million to 16 million flex-fuel vehicles registered on the road in the United States, or 6 percent of all registered light-duty vehicles.

But right now, just 2 percent of the nation’s 152,900 gas stations offer E85 as a fuel choice. The majority of stations that sell E85, 60 percent, are located in just 10 states. Minnesota has the most gas stations selling E85, operating 303 of them in 2014.

According to the Fuels Institute report, there is room for growth both in the number of flex-fuel vehicles on the road and in the number of gas stations selling E85.

The report found that sales of E85 will increase from 196 million gallons in 2013 to at least 400 million gallons and up to 4.4 billion gallons by 2023. And by 2023, there could be 8,907 to 11,151 gas stations selling E15 and 25.9 million flex-fuel vehicles on the road.

The report takes into account retail sales data from more than 300 fueling locations that sell E85, consumer trends and vehicles sales, among other factors.

Whether E85 sales end up at the higher range of the estimates largely depends on the price at which gas stations offer the fuel, the report found. Because E85 contains about 23 percent less energy than regular-grade gasoline, the fuel must be priced sufficiently low enough for it to make economic sense for a flex-fuel vehicle owner to fill up with it at the gas station. The report found that E85 ideally must be priced 60 cents lower than regular-grade gasoline in order for consumers to use the fuel.

E85’s growth also depends on the automobile industry continuing to adopt flex-fuel vehicles at current rates.

“Increasing the E85 station count would improve the potential for additional E85 sales and introduce additional competition to the market,” Eichberger said. “But several other factors — including the relative price of E85 compared to unleaded gasoline and the number of vehicles on the road that can operate on E85 — must also be evaluated to determine the potential E85 market, especially because flex-fuel vehicles can operate on either E85 or gasoline.”