Re: Why is the supply of E85 fuel so tightly controlled?

Saab C900 Viggenist wrote:
>> >>The price of E85 at the outlet he buys from in Forrestville (Sydney) is >>A$1.05 per litre at present (I guess it does vary a little over time). The >>only reason I could think of for why it's being so tightly regulated is that >>there are exclusive agreements in place with Manildra Corp for supply of the >>ethanol going into the fuel mixture, and that the government has basically >>removed it's excise (which accounts for a large degree of the much lower >>price) as a 'sweetener' to big business and government departments to >>kick-start the interest in high-concentration ethanol blend fuels in Oz. >> >>Does anyone know any more about this? > >There is no exclusive arrangement with Manildra (and never was).

Still seems bizarre. I wasn't sure but on the face of it the whole situation does look like it's 'rigged' to suit certain outcomes.

Currently ethanol blended fuels attract the same excise as petrol >(38.143¢ a litre). Local ethanol producers, of which there are >several, are paid a subsidy of 38.143¢ a litre (which effectively >offsets the fuel excise component). There have also been substantial >GovCo grants towards the cost of setting up ethanol manufacturing >facilities.

I know about the grants for the manufacturing facilities, I didn't know there was an 'offset' payment going to the ethanol producers though. I wonder what 'creative' way the government is using to recover that money back from taxpayers? I also wonder if other parts of the world (esp. the USA) are getting as wound-up about ethanol fuels as is happening here?

What would be really interesting is the gauge the effect in Europe, because in Europe diesel vehicles are a lot more common and there would be a lot less rural land with a climate suitable for growing crops to produce ethanol for vehicle fuel production. Here in Australia and in the US there is loads of space (currently) to commercially farm crops for ethanol production, though what will happen when ethanol fuels really do become more mainstream is what'll be interesting to watch also.

The downside for the consumer (apart from the cost of the grants and >subsidy) is the energy content of ethanol, which is around 40% lower >then petrol... 27MJ/kg vs 43MJ/kg (note that these figures are based >on mass, not volume). All other things being equal (octane ratings, >etc) fuel consumption is directly proportional to energy content. >Hence E85 has around 30% lower energy content than petrol and you'd >therefore expect to use 30% more under the same operating conditions. >To provide the same value it needs to be 30% cheaper than petrol. >(Apart from what GovCo hands out from our taxes.)

I was aware the chemical nature of ethanol meant that there would be poorer fuel economy measured purely on a litre per 100 km basis compared to conventional hydrocarbon fuels.

I suppose the vehicle manufacturers will try to develop ways to improve the energy 'extraction' from engines designed specifically to run on fuels like E85 so that any price offsets are offset further by fuel economy savings. Not sure if Saab itself has been doing much in this regard since GM tends to put the lid on anything controversial (as do Ford - witness the 'before their time' electric vehicles that each company tries to deny ever existed) that will upset other industries that GM depends on for the indirect revenue sources into the automotive manufacturing industry as a whole.

The same comparison (based on energy content) also applies to E10, >which almost never provides the same value as petrol.

Yep noticed this first-hand, and I think people are being duped because the pricing of E10 is a little cheaper than the same octane-rated conventional petrol so they believe they're getting better value.

Craig.