How ethanol is jacking up your gas costs

Next time you pull your auto up to the pump, take a second to look for a now-ubiquitous sign that says some variation of "This fuel may contain up to X percent ethanol." If you've already seen it, you probably didn't think much about it. But the ethanol content that little disclaimer warns you of could actually be driving up your annual gas costs.

We've all heard that using ethanol could be more environmentally friendly than gasoline (although that's debatable), and that could help reduce our dependence on foreign oil.

But those benefits, however tenuous, don't come without a price to American drivers, even after you take into account billions of dollars in government subsidies. That's because ethanol literally has less bang for the buck than gasoline. That is to say, it is less energy-dense, meaning you have to burn more of it to drive a car the same distance than you would with pure gasoline.

What that means for the average driver is that when they drive up to a pump and fill their car with E10, the most common type of ethanol-gas blend made up of 90 percent gasoline and 10 percent of ethanol, you'll be getting poorer fuel economy. How much poorer? Well, the EPA puts the fuel economy reduction at 3 percent to 4 percent for E10.

That may not sound like much, but over the course of a year, it adds up. Let's do a thought experiment: Say you own a 2011 Chevy Malibu with a V-6. The EPA estimates, if you drive 15,000 miles a year, you'll use about 750 gallons of gas, at a cost of $2040. Now add 4 percent to that, and you're talking about 780 gallons, or an increase of $81.60 to your annual fuel budget.

What's more, the Renewable Fuels Association, the trade group representing the country's ethanol producers, is asking the EPA to push for widening the use of E15, or a fuel mixture that's 15 percent ethanol. Whatever you believe about that mixture's effect on older cars and non-road engines, using E15, or at some future point E20, will almost certainly push your annual fuel costs even higher. A study conducted by the Oak Ridge National Laboratory found E20 degraded fuel economy by almost 8 percent. With our Chevy Malibu, that would be an extra $163.20 over the cost of using pure gas.

So what can you do about it? Keep an eye out for gas stations in your area that don't have the 10 percent ethanol signage on pumps. There's a Web site called pure-gas.org you can check out, too, that allows users to identify "pure gas" stations in their areas.

What do you think? Is adding ethanol to gas a bad idea? Are the potential benefits worth the costs?

source: bankrate