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Metro Holiday Gas Stations Experiment With E85 Pricing

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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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BLOOMINGTON (WCCO) — If you drive a flex-fuel vehicle, at what price point will you pull in and fill up with E85? That’s what Holiday is trying to determine at select gas stations across the metro.

Anyone who drives a flex-fuel vehicle knows quite well that the price advantage can be tricky. Ethanol produces less power when burned, so, consequently, fuel mileage is noticeably less than conventional gasoline.

However, if E85 sells for at least 20 percent less than regular unleaded gasoline, it begins to overcome ethanol’s poorer fuel economy.

On Monday, commuter Kathy Lindquist was pleasantly surprised to discover that her Holiday gas station dispensed E85 for just $2.35 per gallon. That’s a full $1.20 less than the posted price for regular unleaded, which is a 34 percent price difference.

“I’m excited,” Kathy Lindquist said. “I’m telling everybody.”

With that price difference, it will more than overcome the fuel mileage disadvantage.

According to Holiday, the sudden price drop is part of a broader marketing research study. It will experiment with varying price points at 11 stations around the Twin Cities metropolitan area.

The company is trying to determine at what price point a flex-fuel vehicle customer is more willing to fill up with E85. The 60-day study will measure discounts of $0.80, $1.00 and $1.20 per gallon to see where E85 sales kick in.

At some participating stations, the fuel promotion is clearly advertised on electronic billboards to help draw traffic.

Federal Renewal Fuel Standards require refiners to produce even more ethanol in the years ahead at a time when gas consumption is falling. If they can’t blend more into regular gas, they’ll have to sell more to flex-fuel consumers.

About 3.6 percent of all vehicles on the roads today are designed to run on E85.

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