The Widening Gulf in Gasoline Prices

E10 prices have dropped, while regular gasoline prices have climbed.

November 06, 2013

WATERLOO, Iowa – The gap between E10 and regular fuel is growing, triggered by a mandate from the U.S. Environmental Protection Agency (EPA) to add more renewable fuels in the U.S. gasoline supply, the Waterloo Cedar Falls Courier reports. In Iowa’s Cedar Valley, E10 has dropped under $3 a gallon lately.

Part of the change has been the addition of E10 in 87 octane, which blends 84 octane regular gasoline and ethanol. E10 used to be available only as 89 octane fuel. E0 or “clear” gasoline now a 50/50 blend of 84 octane with 91 octane premium gasoline, driving up the price.

“The difference in cost fluctuates but has widened to a 30-cent spread,” said Brian Johnson, vice president of finance and corporate secretary for Casey’s General Stores. Ethanol blended gasoline constitute around 85% of fuel sales at Casey’s, but he said some motorists still prefer pure gasoline. “We do recognize we have a lot of customers who don't like ethanol in their cars,” said Johnson.

The gap between ethanol blends and regular gasoline started increasing last year, according to NACS spokesman Jeff Lenard. “It is largely related to demand,” he said. “Simply put, fewer consumers are using the higher blends, so that is putting a premium on their value. A decade ago, about 30% of all gas sold was mid-grade or premium. Today, about 15% is.”

With refineries having made the switch to winter blends, gasoline prices should stay low, said Gregg Laskoski, senior petroleum analyst with GasBuddy.com. “Prices are going down and should continue to go down through the end of the year,” he said. “There was a report from Department of Energy yesterday that's showing pretty healthy levels of crude and gasoline inventory. … In fact, the nationwide refineries were operating at 87% capacity, and in the Midwest they were performing at about 94%. That's very strong and it's one of the things that's helping the price to come down.”

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