Gas Prices Drop Below E-85

Source: By KEYC News 12 • Posted: Thursday, December 10, 2015

MANKATO, Minn. – The cost for a gallon of standard gasoline has fallen beneath the price for a gallon of E–85.

And while some may see this as a blow to the ethanol industry, producers of the fuel are confident this is just a temporary situation.

With all commuters tethered to the gas tank, the price at the pump is a serious issue.

But drivers who opt for ethanol–blended fuels are finding a surprise.

Per gallon, it is now cheaper to purchase standard gasoline instead of the traditionally less expensive E-85.

Jim Lambert of POET, an ethanol producer in Lake Crystal, says this is a short–term situation.

Jim Lambert, the General Manager at Lake Crystal POET, says,”It’s temporary fluctuation. Ethanol is still the cheapest fuel available over the course of the year.”

“What you’re seeing right now is just a temporary fluctuation in the market. Sometimes you’ll see it in the winter–time and as driving slows down and there’s plenty of fuel to go around. You’ll sometimes see that ethanol or E-85 and E-10 are very close to the same price.”

Because the fuel is refined from corn, the lower cost corn is expected to keep ethanol competitive.

Kent Thiesse, a farm management analyst, says, “Obviously from a profitability standpoint for ethanol plants the price of corn is a big factor because that’s their big–cost item and certainly lower corn prices, even with the lower ethanol prices, will help keep those margins close to positive.”

Lambert says, “We have to use corn and that’s one of the reasons we’re here is to buy corn. And corn is the biggest impact on our business. Right now we’re, with ethanol prices depressed and corn prices depressed, we’re still chugging along.”

But until prices change, drivers may have one less option at the pump.

Last year, the ethanol industry used around five billion bushels of corn to create their fuel.