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After 2 years stuck at 2.99, E85 at the Citgo here in Annapolis is 2.59, while 87 octane is 2.75. Not cheap enough to break-even, but still nice to see!

Hi GoNavy:

___With the Ethanol futures running higher then straight up gasoline and the inability to pipe it, it has got to be the $0.50/gallon Government subsidy making this possible? I still wish they would allow Brazilian based Ethanol in as we do not have nearly the supply we need now let alone far into the future! IIRC, Missouri just past an E10 Mandate a week or two ago adding to the ever increasing Supply/demand imbalance! These politician types had better start looking at the overall supply/demand picture or there will be hell to pay for the US consumer in the not to distant future. The oil companies probably love this as they can blame the $/gallon increase on somebody else again all the while raking in a ridiculous amount of $’s!

___Good Luck

___Wayne

Can anyone tell me why ethanol was selling for $1.25/gal on the open market 12 months ago and now it's $2.80/gal? What's the deal here?

I think it is because some companies are starting to replace their gas additive with it.

Hi Brandon:

___Tom is exactly right. Not only is MTBE being phased out due to lawsuit concerns, Ethanol is being overrun on the demand side with all the state mandates. The US makes enough Ethanol for a little over 2% of our daily fuel consumption needs but most states want 10% in their gasoline starting yesterday. This places a huge distortion in the supply/demand marketplace and one the Ethanol manufacturers are oh so glad to take to the bank. In this one case, they actually deserve it!

___The real question we should be asking is how Brazil can produce Ethanol at $0.60 - $0.80 per gallon? Sugar Cane is the answer as it is such a great crop for Ethanol production. The US levies a harsh import duty on Brazilian Ethanol currently :( Even when manufactured with US Corn, Ethanol is still hugely profitable at current base commodity pricing in this country. The Ethanol manufacturers will be making as much as humanly possible for as long as one could possibly imagine given the sheer price delta’s of manufacture to retail outlet. Makes me wish I owned an Ethanol plant right now in fact.

___Good Luck

___Wayne

Last time I checked, the import tariff on ethanol is 54 cents a gallon. If Brazil is spending 60 cents and has a 54 cent tarriff placed on it, that should still make it hugely profitable when ethanol is going for $2.80/gal on the spot market. I realize transportation costs are a factor too, but there's a huge gap between what I saw as the reported wholesale price of E100 currently and what it seems to actually cost to produce. I guess that would explain why investment in ethanol infrastructure supposedly tripled last year though.

Hi Brandon:

___Because the US needs about 6 Billion gallons of Ethanol/year and will only make ~ 4 billion, I think you see why there is such a huge problem. Not that Ethanol can or ever will solve our insatiable thirst for liquid fuel(s) (it will not by corn anyway), it can take some of the punch out of $3.00/gallon gasoline when purchased for $0.50 more then it is actually made for. At $1.75 - $2.00 including the $0.50 upcharge for transportation and taxes per gallon right now, it is a much better value then straight gasoline at $3.00 per even with the 20 - 25% FE hit. Whether we see the real world Ethanol production costs + taxes and transportation at the pump in the near future remains a huge wild card. I suspect we won’t but there is always hope. If we were to turn over to a Bio Diesel/Ethanol fueled economy, the manufacturers could then design our cars with HCCI or 12.5:1 or higher Compression ratios in a std. ICE to get back some of the FE lost with Ethanol’s lower Caloric content.

___Good Luck

___Wayne