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The demand for E85: Geographical location and retail capacity constraints

Author

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  • Pouliot, Sebastien
  • Babcock, Bruce A.

Abstract

Consumption of high-ethanol gasoline blends must increase if United States renewable biofuel mandates are to rise above current levels as envisioned by the Renewable Fuel Standard. One such blend is E85 which contains no more than 85% ethanol and no less than 15% gasoline. We derive the demand for E85 based on a model of motorists' preferences for motor fuel blends and calibrate the demand for E85 using data on the location of flex vehicles and fuel stations that sell E85 in the United States. We also show how limits on the capacity of fuel stations to sell E85 affect demand and explore the potential future demand for E85 by increasing the number of fuel stations offering E85 and the number of flex vehicles. We show that the existing fleet of flex vehicles is sufficient to accommodate more than 15billiongallons of ethanol without a large price discount on E85 only if the number of stations that sell E85 increases substantially. Provided with fast enough installation of new E85 pumps, this level of consumption would be sufficient to meet the mandates envisioned for conventional ethanol by 2015.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Pouliot, Sebastien & Babcock, Bruce A., 2014. "The demand for E85: Geographical location and retail capacity constraints," Staff General Research Papers Archive 38150, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:38150
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    Cited by:

    1. Gabriel E. Lade & C.-Y. Cynthia Lin Lawell, 2021. "The Design of Renewable Fuel Mandates and Cost Containment Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 213-247, June.
    2. Liao, Kenneth & Pouliot, Sébastien, 2016. "Estimates of the Demand for E85 Using Stated-Preference Data off Revealed-Preference Choices," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236107, Agricultural and Applied Economics Association.
    3. Pouliot, Sébastien & Babcock, Bruce A., 2017. "Feasibility of meeting increased biofuel mandates with E85," Energy Policy, Elsevier, vol. 101(C), pages 194-200.
    4. Aloisio S. Nascimento Filho & Rafael G. O. dos Santos & João Gabriel A. Calmon & Peterson A. Lobato & Marcelo A. Moret & Thiago B. Murari & Hugo Saba, 2022. "Induction of a Consumption Pattern for Ethanol and Gasoline in Brazil," Sustainability, MDPI, vol. 14(15), pages 1-11, July.
    5. Sébastien Pouliot & Kenneth A Liao & Bruce A Babcock, 2018. "Estimating Willingness to Pay for E85 in the United States Using an Intercept Survey of Flex Motorists," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1486-1509.
    6. Gabriel E Lade & C -Y Cynthia Lin Lawell & Aaron Smith, 2018. "Policy Shocks and Market-Based Regulations: Evidence from the Renewable Fuel Standard," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(3), pages 707-731.
    7. Soren T. Anderson & James M. Sallee, 2016. "Designing Policies to Make Cars Greener: A Review of the Literature," NBER Working Papers 22242, National Bureau of Economic Research, Inc.
    8. Gabriel E. Lade & James Bushnell, 2019. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(3), pages 563-592.
    9. Sebastien Pouliot & Bruce A. Babcock, 2014. "Impact of Ethanol Mandates on Fuel Prices when Ethanol and Gasoline are Imperfect Substitutes," Center for Agricultural and Rural Development (CARD) Publications 14-wp551, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    10. Gabriel E. Lade & James Bushnell, 2016. "Fuel Subsidy Pass-Through and Market Structure: Evidence from the Renewable Fuel Standard," Center for Agricultural and Rural Development (CARD) Publications 16-wp570, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    11. Ghoddusi, Hamed, 2017. "Blending under uncertainty: Real options analysis of ethanol plants and biofuels mandates," Energy Economics, Elsevier, vol. 61(C), pages 110-120.
    12. Korting, Christina & Just, David R., 2017. "Demystifying RINs: A partial equilibrium model of U.S. biofuel markets," Energy Economics, Elsevier, vol. 64(C), pages 353-362.
    13. Luo, Jinjing & Moschini, GianCarlo, 2019. "Pass-through of the policy-induced E85 subsidy: Insights from Hotelling's model," Energy Economics, Elsevier, vol. 84(C).
    14. Zhou, Wei & Babcock, Bruce A., 2017. "Using the competitive storage model to estimate the impact of ethanol and fueling investment on corn prices," Energy Economics, Elsevier, vol. 62(C), pages 195-203.
    15. Lade, Gabriel E & Lawell, C-Y Cynthia Lin, 2015. "Mandating green: On the Design of Renewable Fuel Policies and Cost Containment Mechanisms," Institute of Transportation Studies, Working Paper Series qt5zj382t4, Institute of Transportation Studies, UC Davis.
    16. Andersson, Linda & Ek, Kristina & Kastensson, Åsa & Wårell, Linda, 2020. "Transition towards sustainable transportation – What determines fuel choice?," Transport Policy, Elsevier, vol. 90(C), pages 31-38.
    17. Liao, Kenneth & Pouliot, Sebastien, 2015. "Econometric Analysis of Motorists’ Preference for Ethanol in Motor Fuel," ISU General Staff Papers 201501010800001006, Iowa State University, Department of Economics.

    More about this item

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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