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The Folly of Biden’s Ethanol Mandate
President Biden has authorized the use of E 85 gas for the summer. According to Business Insider, ethanol wholesales for $2.22 per gallon, and gasoline wholesales for $3.20 per gallon. Gasoline has 33% more energy than ethanol, so the gas equivalent price of ethanol is really $2.95 per gallon (2.22 x 1.33=2.9526). So the difference in price is 25 cents per gallon, but because the increase in percentage of ethanol is only 5% (moving from 90 percent to 85 percent) the actual savings per gallon is about 1.25 cents per gallon (25 x 5% = .0125).
In other words, consumers may pay less per gallon of the blend, but they will pay essentially the same amount per mile traveled. I doubt going to E 85 will affect the wholesale markets for gas and ethanol much, but if it does the effect will be to make gas a little cheaper, and ethanol a little more expensive, reducing the overall cost differential.
So that is the cost savings. There are, of course, other consequences. The price of food will increase by some amount as more corn is turned into more ethanol. The impact in the US is likely minor but overseas, more poor people will starve. Pollution will presumably get worse, since the reason to not have E 85 in the summer was air quality. I am sure there are other drawbacks, including increased demand for fertilizer at a time when the price of NPK is increasing.
All of this is to create the illusion that the price per gallon is lower, when the price per mile is essentially the same. Why does President Biden think people won’t notice their weekly gas spend is about the same?
Published in Economics
Creating an illusion is about the only thing they’re good at, and they’re not getting better.
Because his crew thinks Americans are stupid. Meanwhile, Americans are looking at him and his crew and thinking, “How can they be so stupid? And why should I vote for them again?”
At his speech announcing this, Biden also said, “we’re investing more than $100 million to build biofuel infrastructure of the future — things like blend pump — blender pumps, the gas pumps that can handle higher blends of bio-ethanol and diesel fuel.” Why, if we’re going to be all electric in a few years?
This post is a good summation of information the people would get from a government that is honest and transparent. But if our government were in that mode they would stop doing stupid things.
I have a sticker on the inside of my gas cap that tells me not to use E85.
See this post at Security Studies Group: To Avoid Wartime Famine, Suspend Corn Ethanol Production
Biden is stealing from the Strategic Petroleum Reserve at the worst possible time, given all the cr*p going on, not to mention what else might happen. I’d hate to see our military run out of gas during a worldwide crisis . . .
A few years ago there was plenty of information from organizations like the AAA telling you not to use E85. I haven’t kept up with the data, but I wonder if there’s a difference between older cars and newer models. In any event, best to check. I do believe E85 hasn’t been tested on small engines like lawn mowers, so best to stock up (that’s what I’ll be doing.)
My head about exploded when I heard this yesterday. As mentioned in the OP, E85 is believed to increase smog, especially in warmer temperatures (so much for the green nude eel). Beyond that, only a truly stupid person would–at a time when energy prices are soaring (increasing the cost of food); when fertilizer costs are soaring and it is becoming less available (increasing the cost of food and potentially creating shortages of food); when farmers are struggling with astronomical production costs sometimes several times what they were just last year, and labor shortages (increasing the cost of food and the viability of the smaller farms–not good news for the food supply in the long term; when the supply chains are completely screwed up (potentially causing shortages of food–decide to put the nation’s, and the world’s, food supply in his gas tank and burn it, simply because he doesn’t want to be Donald Trump and turn on the oil and gas spigots in the US.
So they’d rather have people starve than suck it up and let us drill for our own oil again? Morons.
Typical of this administration’s consistency. The one thing they do consistently is lie.
You think it is really that and not just slow Joe turning into stupid Joe? That is really evil because he is hurting loads of people.
Actually, evil is a better descriptor of their actions.
I won’t put E85 in my truck unless it’s an emergency. Ethanol sucks water from the air.
Well, they voted for him once already, so they can’t be THAT bright.
Also, many people only see the price at the pump. If they actually notice that they’re still spending the same amount (or perhaps more) on fuel, they’ll blame it on something else.
Hmmm. What kind of car? I’ll have to check mine.
Kedavis, I think you are right, that the Biden administration thinks that people will look at the price per gallon, and not the overall spend and they will get some credit for this. This just shows they learned nothing from the 2 separate releases from the strategic oil reserve. Prices may have moved some from the release, but has anyone noticed and credited the administration? I would contend any price effect was lost in the regular fluctuations in prices. What the public will remember is they are poorer now than they were in 2019 or 2020, and everything Biden has tried failed to change that basic fact.
I’m a bit concerned by this whole “post,” actually. As far as I’ve seen, E85 is a specific fuel and NOT what most people get when they fill up. Yes, “regular” gasoline often/usually/always has some ethanol blended in, but that’s not the same as E85. “Regular” gasoline is more like E10, or maybe E15. And from what I’ve heard, the new change is to allow for something like E15 even when the seasonal formula might switch to E10, which is supposed to reduce the price-per-gallon by enough for people to vote Democrat in November…
However, for regular vehicles, even prolonged use of E15 can cause problems. So I guess they’re hoping that people will vote Democrat before their cars break down from using E15.
And it destroys gaskets and seals.
They might not see the price at the pump, but everything is going up in cost, and the price of fuel is a common denominator . . .
Yes but on the other side, if EVERYTHING is going up, then gas doesn’t really stand out.
I do think that the Democrat party has made its claim to being everything that Trump is not. It’s purely political, and has nothing to do with reason or logic. As long as they’re not Trump, they don’t care if they hurt people.
And a lot of The People don’t seem to care either.
Biden and his cronies tell lies every day about this and we have many who believe the lies that someone else is hurting them.
Well, that and they don’t care about hurting as long as there’s no President Trump.
Some of them, yes, but it looks like many votes will go in another direction. We’ll see this November.
I’m surprised at you people. Elizabeth Warren has explained the whole thing. Big companies are using inflation as a cover for raising their prices.
Not only is she a Senator, she was previously a faculty member at one of our most prestigious universities. So there.
Whatsamatta U?
Got me thinking. I thought E85 was …
This is from Powerline, and if you go there you can watch the video. A bird craps on Biden.
So, yeah, they’re talking about increasing the ethanol content at the pump from 10 to 15%. I’ll reiterate, I’m not putting E15 in my tank unless there’s no alternative. Ethanol is a stupid thing to put in gasoline, and it’s especially stupid if you have to get it from agricultural land.
And the tractors etc that grow and harvest the corn, don’t run on ethanol…
Im more concerned with the fact that this raises the price of corn when 40 percent of the worlds wheat market just disappeared.