The ‘ethanol tax’ revisited

There are two current “shows that never end” on News Cut. One is the “WCCO fires Paul Douglas” entry. The other is the “ethanol tax” entry with my unscientific “study” that revealed how much more per gallon I have to spend for ethanol-blended gasoline than your basic “let’s toast the Saudis” blend.

The Wall Street Journal blog picks up the theme of the latter — without crediting, or probably reading, the genius of my ‘study’ — by pointing out that at least one Web site is actively tracking this gap between the blends.

AAA, it says, has been posting the “adjusted E-85 price” as part of its daily gas price survey. Here’s how the adjusted price is calculated:


The BTU-adjusted price … is not an actual retail average price paid by consumers. According to the Energy Information Administration E-85 delivers approximately 25 percent fewer BTUs by volume than conventional gasoline. Because “flexible fuel” vehicles can operate on conventional fuel and E-85,the BTU-adjusted price of E-85 is essential to understanding the cost implications of each fuel choice for consumers.

I had calculated — very conservatively — a 2 or 3 cents per gallon “ethanol tax.” The Journal blog says it’s closer to 8%:


If that spread persists as E85 gains widespread use in America’s cars, rather than the niche of vehicles now equipped for the fuel, the hidden costs for drivers would be akin to upgrading in the current gasoline-oriented world from regular to mid-grade. When was the last time you did that?

Wondering if this is the water-cooler talk at the Ethanol and Biodiesel University convention this weekend in Las Vegas?

3:19 p.m. – Dan McCullough E85prices.com posted a long commentary in the original “ethanol tax” topic (see link above). For straight price comparison, his site is pretty fascinating.

  • I’m sure you noticed my comment on the WSJ blog — “The AAA is being dishonest and are missinforming their members and the public.”

    I have been planing an op/ed on this topic for some time, every since I first became aware that the AAA had started this missinformation campaign.

    Here’s some highlights:

    Everyone’s mileage is different, depending on driving habits, vehicles, etc. There is no magic formula to come up with the “real price” unless you do the math yourself (as you have, Bob).

    Why just E85? Why not point out how fewer BTUs gasoline has compared to diesel? Or how superior E85 is in BTUs, compared to hydrogen?

    More later.

  • Bob Collins

    Forward me that op-ed piece when it’s done, Bob. I’ll give it it’s on News Cut entry.

  • I take it all back, Bob, you’re a great guy!

    …no matter what DeRusha says about you.

  • Jim

    Hydrogen has 61,100 BTUs per pound versus 20,900 BTUs per pound of gasoline.

    But it’s nonsense to compare fuels that can’t be burned in the same engine. I think Bob’s point is that E85 as an alternative to gasoline at the fuel pump is not a very good deal.

  • GregS

    Gosh, how many BTU’s does lead have?

    It is mind-blowing how silly this “BTU” bit is. How about informing the public that we only benefit from 40% of the BTU’s in a gallon of gas? The other 60% of BTU’s in a gallon of gas either goes out the exhaust pipe in the form of partially combusted gasoline or is transformed into heat (which is why cars need a radiator and a cooling system).

    We blend ethanol into gasoline for the same reason we used to blend in lead…….to prevent pre-ignition in order to get a whole 40% worth of energy out of a gallon of gasoline.

  • Bob Collins

    Well, I think the goal is to come up with some sort of “unit pricing” comparison which — as with any consumer decision — is important in order to make good decisions. Otherwise, you’re left in a position of looking at a 5 pound sack of coffee for $30 and a 1 pound can for $10 and choosing the $10 one because it’s cheaper.

    In any event, the statistics you cite though, Greg, because I’m not sure what you mean be “benefit.” I noticed on the NOVA special the other night, the Magliozzi brothers indicated that only about 10% of the energy content of gasoline actually is involved in moving the car.

    Of course all that matters — from an economics point of view (and for the sake of argument, I acknowledge that it’s not all about driver economics) — is how much gets me how far?

  • Jim

    I like the waste heat BTUs – especially in January.

    E85 has much more ethanol than is used to prevent knocking in regular gas. E85 is promoted as a green fuel – a promise it doesn’t seem to fulfill very well.

  • Jim, at standard atmospheric pressure and temperature, that single pound of hydrogen you mentioned would require about 190 cubic feet of space just to store it.

    To paraphrase the late great Roy Scheider, “We’re gonna need a bigger car.”

  • Jim

    190 ft3 H2 might be just enough to get your car off the ground 🙂

    But seriously – people are working on better ways to store it in a fuel tank.

  • GregS

    Well, I think the goal is to come up with some sort of “unit pricing” comparison which — as with any consumer decision — is important in order to make good decisions. Otherwise, you’re left in a position of looking at a 5 pound sack of coffee for $30 and a 1 pound can for $10 and choosing the $10 one because it’s cheaper.

    I can understand the temptation for a per unit measure but using BTU’s per gallon as a yardstick is about as meaningful as measuring comedians by LPM’s (laugh per minute).