Motorists had anticipated the unpleasant surprises that the end of pump discounts from January 1, 2023 would bring, which for several months had masked the true level of fuel prices. But the most surprising development is undoubtedly that of superethanol, better known under the name of E85.
In recent weeks, its price at the pump has skyrocketed, with an increase of 25% compared to the last month. In this new year it has definitely exceeded the symbolic bar of one euro per liter and even stands at an average of 1.15 euros per liter in French service stations.
About 65 euro cents of difference with the liter of SP95-E10
This increase makes motorists who have opted for this fuel tremble because of its historically attractive price compared to gasoline and diesel. In fact, despite an overconsumption of around 25%, and the cost of installing the FlexFuel-type box for a sum ranging between 700 and 1000 euros, superethanol was sold a few months ago at around 75 cents per liter, even with a minimum of 50 cents at the height of the sales, compared to more than 2 euros per liter of 95 unleaded gasoline.
Today, this same SP95-E10 sells for around €1.80 per litre, reducing the savings offered by choosing superethanol to just 65 euro cents per liter, or almost half taking into account the induced overconsumption. “Motorists’ interest in superethanol remains strong because the motorist who drives 20,000 kilometers a year can expect to save 500 euros and therefore have enough to pay his box in two years,” says Sylvain Demoures, general secretary of the Union of the Agricultural Association. Alcohol Producers (SNAAP).
Moment of gas purchases.
Looking closer, it is clear that the mere removal of the 10-cent discount is not enough to explain this significant increase in the price of superethanol. In reality, E85 is not affected so much by the rise in the price of the gasoline it contains, whose share can reach 35% in winter, as by the ethanol that makes it up to 85%, as its name suggests. Sylvain Demoures evokes a phenomenon of widespread inflation on agricultural raw materials and energy: “The entire industry has experienced it, including bioethanol producers who are often manufacturers of sugar or starch and buy a volume of gas per year and generally in summer”.
It is this periodicity that allowed superethanol to remain fairly stable in the first half, since the contracts had been signed before the war in Ukraine. On the other hand, the level of gas prices was particularly high last summer, which pushed up ethanol prices. To do the latter, producers need (natural) gas for nitrogen fertilizers or to generate the heat needed for distillation.
Relative price stability in 2023
While a surge in demand for superethanol last year forced operators to exceptionally buy ethanol on spot markets to meet it, the SNAAP representative is quite optimistic for the coming months.
“If consumption is in line with distributors’ expectations, prices should be relatively stable over the next year because the ethanol price is fixed for the year,” continues Sylvain Demoures. Only the part of the gasoline that is subject to daily variations could change the price. of E85 but in limited proportions therefore”
Source: BFM TV
