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E85 Fuel Sales Rebounding, Despite Fading Subsidies

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(credit: CBS) Bill Hudson
Bill Hudson has been with WCCO-TV since 1989. The native of Elk Rive...
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ANOKA, Minn. (WCCO) – At a dealership lined by rows of flashy new cars and trucks, the sales staff at Main Motor in Anoka is good at answering questions about flex fuel vehicles and burning E85.

Jeremy McFarland, the dealership’s sales manager, says people ask him about E85 because at the pumps it’s marked anywhere from 20 to 60 cents less.

Since the alternative fuel was introduced in 1997, Minnesotan’s appetite for E85 has grown steadily. In 2008 it hit a peak when more than 22.5 million gallons were pumped into cars and trucks.

Sales slipped during the recession years of 2009-10, but they appear to be coming back.

The commerce department just released sales for 2011, which show that we burned another 19.8 million gallons of E85. Some of that went into Sandra Kilby’s Chevy Tahoe, and she feels pretty good about saving on money.

“Yes, anything I can save I feel better about,” she said. “Nowadays with the economy the way it is.”

But as government subsidies for ethanol production dry up, the savings advantage over regular gasoline is shrinking. What had long been a 60-cent spread was more like 30-cents recently at a Bobby and Steve’s filling station in Minneapolis.

That savings may no longer offset E85’s inefficiencies. It’s no mystery that ethanol delivers less energy per gallon than burning the same gallon of gasoline. Fuel mileage is noticeably less, anywhere from 15 to 20 percent.

Even at that, the American Lung Association of Minnesota, a major proponent of E85, says the decision to burn the fuel comes down to more than just cost.

“Don’t let the perfect get in the way of better. There’s no doubt E85 is better than gasoline when it comes to tailpipe emissions,” says the Lung Association’s Bob Moffitt.

With America’s big three automakers offering 51 models of flex fuel vehicles this year, there are sure to be more of them rolling down the highways. Consumers who are motivated both by trimming pollution and cutting cost likely be behind the wheels.

“It’s going to be here. The future of E85 is here to stay, I know that much,” McFarland said.

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