VALPARAISO | Attracted by the $2.99 a gallon price, Jason Bradley pumped the E85 blend of ethanol and gasoline into his Chevrolet Suburban at a Family Express station Tuesday.
"It's just cheaper right now," said Bradley, who'd converted to the biofuel only in the past few weeks, when the low price outweighed any loss of fuel efficiency attributed to E85.
"If it's 50 cents a gallon less, it's time to use it," Bradley said
Made up of 85 percent ethanol and 15 percent petroleum, the blend is catching on with motorists, said Philip Lampert, executive director of the National Ethanol Vehicle Coalition, which promotes the alternative fuel and lists sites where it's sold across the nation.
The coalition recommends E85 be priced at least 20 percent less than regular unleaded to make up for a loss in fuel economy, Lampert said.
"It has less energy in it," than petroleum, Lampert said. "But if it's priced at 20 percent lower, most motorists will gain some value."
Family Express President and CEO Gus Olympidis said he dropped the price of E85 to $2.99 a gallon at his northern Indiana stations not only because ethanol "is cheaper right now than gasoline," but because U.S. grown corn goes into the blend.
"We make it here," Olympidis said.
The volume of E85 sales at the Family Express chain has tripled since he dropped the price to $2.99 a gallon earlier this month, Olympidis said.
Competing chain Gas City dropped E85 prices at several of its Northwest Indiana locations to about 60 cents below the going rate for regular unleaded gasoline in order to stay competitive, Gas City district manager JoEllen Jostef said.
Sales at those stations are up by about 50 gallons a day, Jostef said.
What's unknown is how long U.S. ethanol producers will be able to hold the line on the cost of the corn-based additive, which also is blended at a 10 percent rate into most regular unleaded gasoline.
After flooding across the Midwest this month, farmers and agriculture experts faced the possibility that thousands of acres of corn could be destroyed.
The floods sent corn prices soaring past $7 a bushel, up from about $4 a year ago, which could force ethanol producers to spend nearly as much for corn as they're getting for the finished product.
The 75 percent increase will play into decisions about future contracts for local ethanol producer Iroquois Bio-Energy, Chief Operating Officer and Assistant Vice President Keith Gibson said.
"We may not produce some volumes if the pricing doesn't justify the cost of the corn going into the products," Gibson said.
-- The Associated Press contributed to this report.
