As many of you may know, the ethanol subsidy was allowed to expire December 31, as many of you were probably out celebrating the New Year with hats and toasting.
So it has been over a month with no special subsidy on ethanol, so what's happening? Well, at my local pump, ethanol is still in the gasoline, so on that level, not a whole lot. However, the price of ethanol has risen- raising the price of fuel with higher ethanol concentrations. E85, a flex fuel that's been sold hard by domestic vehicle manufacturers, has seen a large increase in price, and has one industry leading publication asking a big question- is E85 going to die?
Today we polled some of you, asking if ethanol content in your gasoline was a determining factor for you and nearly 86% said it was. To chime in, I'm definitely part of that 86% myself- who are obviously aware that higher ethanol content means less fuel economy, and want the best bang for their buck.
Highlighting that thinking, according to e85prices.com, a price tracking website, just 7.9% of respondents said they'd buy E85 if it was the same price of gasoline, with a whopping 60% saying they'd only buy E85 if it was 15% cheaper or greater than gasoline.
We've seen the difference between E85 and gasoline narrow considerably, and with intense demand for ethanol from Brazil and the expiration of the tax subsidy gone, ethanol prices will continue to rise, essentially killing demand for ethanol- so the question answer- will E85 survive? I believe that clock has started to tick.