US spread between E85 ethanol, gasoline reaches all-time high

November 10, 2017 |

In Washington, according to crowd-sourced data from the Renewable Fuels Association’s E85prices.com, the national price spread between regular unleaded and E85 has never been greater in the 17 years of tracking on the website. That price differential is currently at 33% for the month of November, or more than 8 percentage points higher than any other month in recorded history on the website. In many locations today—including California, Ohio, Iowa, Kentucky, Indiana and Illinois–E85 is at least $1 per gallon cheaper than E10.

On average nationwide, flex fuel vehicle drivers who fill up with 20 gallons of E85 are saving $14 per tank over drivers who fill up with E10. Even when ethanol’s lower energy density is factored in, E85 costs less than E10 per mile driven.

The advantageous price scenario is due to the widening price spread between ethanol and gasoline, but also the strong value of Renewable Identification Numbers (RINs) credits. In recent weeks, wholesale ethanol prices have been 15-20% below wholesale gasoline prices—the largest discount in more than two years.

Fuel blenders are further discounting the price of ethanol blends by passing along the value of RIN credits to retailers and consumers. Blenders capture the RIN credit when they blend ethanol with gasoline; they can then sell the RIN credit to other blenders or refiners and share some or all of the profit from that sale with retailers and consumers by marking down the price of the ethanol-blended fuel.

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