How Ethanol Affects Fuel Efficiency and Impacts Your Wallet

U.S. ethanol producers are expanding production with the expectation of increasing exports, even as domestic consumption reaches an apparent plateau. Analysts anticipate the Trump administration will maintain current ethanol mandate levels, sticking to a 15-billion-dollar goal for corn-based ethanol and other renewable fuels for next year, Bloomberg reports. Despite the fact that domestic ethanol consumption appears to maintain this level for the foreseeable future, new plants in Iowa and South Dakota are planning to add 500 million gallons a year in production capacity, expecting to sell the excess production to foreign markets, according to the Renewable Fuels Association. Canada and Brazil have been major markets for U.S. exporters, and the Mexican market is expected to grow in importance following news that ethanol levels will increase from 5.8 to 10 percent in most parts of the country outside of Mexico City, Guadalajara and Monterrey. It remains uncertain whether U.S. legislators will lift the current cap on summer ethanol levels, which would further increase domestic demand.

But while these trends may spell an optimistic outlook for the ethanol industry over the next few years, how do these developments affect what consumers pay for fuel? Does greater ethanol availability mean lower gas prices? To answer this, here’s a look at how ethanol affects fuel efficiency and how that translates into what you pay at the pump.

Is Ethanol Fuel Efficient?

From a fuel efficiency standpoint, ethanol’s main attraction as a gas additive is its high octane rating, which helps make gas more resistant to engine knock. Octane ratings for gas in the United States range from 87 for regular unleaded to as much as 94 for premium, while ethanol has an octane rating of 109, according to the Department of Energy. However, this high rating applies to pure ethanol, and once ethanol is added to gas, its octane value becomes diluted. Octane levels drop once fuel absorbs moisture, explains fuel testing provider MLR Solutions. Ten percent ethanol E10 gas does not have a higher octane number than pure gas.

Ethanol’s biggest fuel efficiency drawback is its lack of power compared to gasoline. A gallon of ethanol contains approximately 33 percent less energy than a gallon of gasoline, according to the U.S. Energy Information Administration. Consequently, the fuel economy of E10 decreases by about 3 percent compared to pure gasoline.

How Does Ethanol Impact Engines?

From a long-term perspective, ethanol’s impact on vehicle lifespan should also be taken into account when considering its fuel efficiency. Ethanol has strong corrosive properties that can damage rubber and metal parts in traditional engines and fuel systems. It can also cause moisture clogging in pumps and filters.

Newer vehicles can adapt to low levels of ethanol by using computer-tuned fuel injection and special materials such as fluorocarbon that are resistant to chemical change and to overheating. However, older cars and vehicles such as farm equipment and lawn mowers can be damaged by ethanol, and even some vehicles less than a decade old are not designed to use ethanol levels higher than 10 percent. Car manufacturers, fuel sellers and AAA have all warned of the risks car owners take when using fuel with 15 percent or higher ethanol content, and many manufacturers will void your warranty if you use E15 fuel. Smarter Fuel Future provides a chart to help determine if your manufacturer approves E15 use for your vehicle.

How Economical Are Ethanol Prices?

Despite its disadvantages, one reason ethanol appeals to some car owners is its lower price per gallon. In April 2017, E85 prices averaged 27 cents a gallon less than gasoline, $2.11 to $2.38, according to the Department of Energy.

But when ethanol and gas are compared in cost per mile, ethanol’s advantage evaporates due to its lower mileage per gallon. For instance, a comparison for a 2007 Chevrolet Suburban LS 1500 4WD SUV found that E85 cost 12.4 cents per mile compared to 11.5 cents per mile for gasoline. For practical use, ethanol would need to cost 30 percent less per gallon before it would become more economical per mile than gas, a Kiplinger analysis found. This factor will continue to drive demand for gasoline for the foreseeable future.