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Billyk24

$1.39 in Springfield!

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Traveled from Wisconsin to Missouri (sister) with "Mom" to take her south for the winter.  Saw E85 listed at $1.35 a gallon while E10 and the Klum and ? sattions were $1.64-$1.72 range.  Is this the lowest E85 price in the country?

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Nice prices, but not the lowest.

 

I posted similar prices today

E10: $1.75

E70: $1.35 in ND.

 

If you go to the Prices page and tap on the E85 price heading, it'll re-sort and you'll see lots of lower prices, starting at $1.14 in TX and MI. The highest is $2.54 (negative spread).

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$1.14-$1.39 a gallon for E85 seems too cheap.   Are the ethanol plants making any money at this price?  If not, how long before the prices have to rise?  No one wants a repeat of the 2008 when a number or plants had to shut down.

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post-2293-0-80511500-1450642218_thumb.jpg - Ionia, MI

post-2293-0-82258800-1450642396_thumb.jpg - Lowell, MI

*Aaron walks up, and drops the microphone*

 

Sorry, had to do that, lol.

 

The first two are from Ionia, halfway between Lansing and Grand Rapids. This is THE ONLY reason I have to go to Ionia (hint: I'm not fond of Ionia). The 4th and 5th pics are from Edmore, Michigan, from the end of last year. The last one is from Lowell, near Grand Rapids, from around the same time.

 

As far as profits versus losses, I can tell you that prices this cheap are a significant loss. Exactly how much comes out of whose pocket is unclear to me. From a retailer standpoint, here's how I see it. You may be selling E85 at a significant loss, but when you're selling a higher volume of gasoline, at a smaller loss, that's where your concern comes in. Now again, I don't know the exact specifics here, but when I was working at one of the E85 Marathon stores in East Lansing, the manager had said several times how he is losing money on gasoline - that's when it was selling for $2.39/gallon back at the beginning of the year. So let's say they lose 50 cents/gallon on E85, but they're only selling 200 gallons a day. Now let's look at gasoline, and say they're only losing 10 cents/gallon on gasoline - but selling 5,000 gallons a day. They're losing a total of $100/day on E85, but $500/day on gasoline. So it is worth it for them to sell more E85, simply to balance the losses between the fuels. Now to a point I've made here previously. Most retailers don't make significant margins on the fuel itself - E85, regular, premium, etc. Their bread is actually buttered inside the convenience store. Folks like myself who are die-hard E85 users, or fleet users who buy E85 because they're instructed to, don't want to go to 3 different places to get what we need. I only go to E85 stores to buy my coffee or snacks, so that I can do everything in one stop. I'm not going to stop at one station to buy some tea or a candy bar, and then go to another to fill with E85. So these stores that sell E85, bring in business that they may otherwise lose.

 

From the ethanol producer's standpoint, it's a bit less clear. This is where RINs and any tax credits come into place. They either have to hand down pay cuts to employees, cut costs elsewhere they can, or pass the loss onto blenders. Programs like yellow hose take out the middle man, at least making it easier from the retailer's end. Sometimes the loss is shared, or they find ways to make the process more efficient. Most plants simply create ethanol, and then sell it to blenders who take it from there. E85 blending infrastructure does not exist at every plant. For the plants that it does exist at, they'll like do what I described earlier - cut costs, increase efficiency, or share the loss. For the plants that do not have blending infrastructure at the plant itself, they just sell at the going CBOT rate (or a flat rate to be competitive), and then the blenders are retailers take it from there.

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