Monday, March 17, 2008

The finances of E85

Commenter g asks,

I am left with one question: Why?

You acknowledge that the mpg reduction exceeds the cost savings. I can appreciate the need to reduce reliance on imported fuel, but what about the effect of E85 (subsidized) production on food prices?

I don't think that the mpg reduction exceeds the cost savings, that's why.

If I used enough ethanol to just get the same octane as premium, I would use 4 gallons of E85. I would use 12.4 gallons of regular. I would save 50 cents per gallon for E85, and 20 cents per gallon for regular. I would end up with ~91 octane, which is more than enough for my engine (90 is recommended and provides full power).

I would be saving $4.48 per fillup. If my mileage decreases by 1 mpg because of the ethanol, that is a decrease of 4% in mileage. That costs about $2.14 a tank. So the net savings is $2.33 a tank.

Even then, there are advantages to ethanol. The Saab is a turbo. Turbos love ethanol. Some of the ethanol evaporates when it is injected into the engine. The heat of evaporation of the ethanol is such that it cools the intake charge, which acts like an intercooler. So there may be performance gains with E85 mixtures that I'm not including in the static analysis.

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