|The price of ethanol futures has been rising. Note that the Y axis scale begins at $1.60, not 0.|
GM, continuing its new push on E85 and flexible-fuel vehicles (earlier post), today launched a national advertising and marketing campaign to build awareness and market acceptance for E85 vehicles.
The campaign, “Live Green Go Yellow,” will begin during the Olympics and continue throughout the year. The campaign is designed to make consumers, energy producers and policy makers aware of GM’s E85 capability in current and future models.
With the on-going concern over national energy policy, the need to have more renewable fuel choices such as ethanol blended fuels is a great energy option available today. This campaign will ask the simple question, “what if every vehicle was yellow?” In a way, in the world of ethanol, yellow is the new green, since today its main source is from corn.—Brent Dewar, GM vice president of marketing and advertising
Consumers may be surprised by the impact E85 has on their fuel bill, however.
Because ethanol has less energy than gasoline, engines consume more to deliver equivalent power—in other words, burn E85, and your fuel consumption increases.
As an example, the 2006 Chevrolet Tahoe FFV delivers 13 mpg combined when burning E85 and 17 mpg combined when using gasoline—in other words, due to its lower energy content, ethanol imposes a 23% fuel consumption penalty in this vehicle. The Chevrolet Impala FFV delivers 19 mpg with E85, versus 24 mpg with gasoline—a 21% penalty.
E85 pricing tends to track with gasoline pricing, for a number of reasons. Add in the increasing demand for ethanol both as a standard blending component in gasoline as well as in higher-concentration E85 blends, and the price delta between E85 and regular gasoline may not be enough to offset the decreased fuel efficiency vehicles deliver when running on E85.
According to the most recent (September 2005) Alternative Fuel Price Report from the DOE, E85 averaged $2.41/gallon and regular gasoline averaged $2.77 for that reporting period—a 13% difference.
For the week of 20 January 2006, Axxis Petroleum reported an average fuel ethanol rack (wholesale) price in the Midwest of $2.10, while the EIA reported an average retail gasoline price of $2.282 in the Midwest.
Using the E85 figures from the DOE, a Tahoe FFV driver would pay $2,781 for a 15,000-mile year using E85, compared to $2,444 with regular gasoline. An FFV Impala driver would pay $1,902 with E85, $1,732 with gasoline.
Consumers may be willing to take the additional hit on fuel cost for the offsetting benefits of a biofuel (non-petroleum fuel, reduced greenhouse gas impact). But switching to E85 should not preclude the urgent development of more fuel-efficient FFVs and hybrid FFVs, such as that previewed by Ford. (Earlier post.)
In 2006, GM will offer nine E85 FlexFuel models, bringing an additional 400,000 E85 FlexFuel vehicles into its fleet.