Not only has E85 been oversold as a clean fuel, but if you insist on filling your vehicle with the 85% ethanol blend, you'll also be losing money at the pump. This is because while E85 costs less than regular gasoline, your engine doesn’t burn it as efficiently. As of Friday, AAA's Fuel Gauge Report puts the average price of E85 at $3.284 a gallon (well below the price of gas, which was $3.962 on Friday), but it adjusts the price based on the fuel’s lost efficiency compared to gasoline.
The actual average price when you factor in E85’s poor fuel economy? $4.321 per gallon. Hardly a deal, right?
Of course, some Midwestern states, like Iowa, Illinois and Minnesota, have taken to not only subsidizing corn production for ethanol, but also subsidizing the fuel at the pump, thus lowering the cost further. Still, according to E85Prices.com, the greatest spread between ethanol and gasoline prices right now is the 28% difference in South Dakota. This is one of just two states in the country where the adjusted average price of ethanol ($3.794) is lower than the average price of gasoline in that state ($3.890). The other is Colorado, where the difference is 26%. The next closest is New York with a 24% spread, so while gasoline's average cost is $3.87 a gallon there, ethanol's adjusted price comes to $3.98.