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Title

Is ethanol worth tanking only when it costs 70% of the price of the equivalent in volume of gasoline?

Authors
Pacini, Henrique
Walter, Arnaldo
Published in Biofuels. 2014, vol. 5, no. 3, p. 195-198
Abstract In Brazil it is widely believed – both in academic literature and in popular media – that tanking flex-fuel vehicles (FFVs) with hydrated ethanol (E100) pays off only up to the point when this fuel costs 70% of the price of the equivalent in volume of gasoline (E18–E25). This note explores this belief, using empirical data from a Brazilian monitoring programme (CONPET) in order to compare if the 0.7 threshold holds against empirical testing. The note finds that, on average, ethanol is worth chosing only up to 68% of the gasoline price. While apparently insignificant, this 2% difference can have large aggregate welfare consequences for vehicle drivers and for the competition between fuels.
Keywords EthanolGasolinePriceThresholdPayoffEfficiencyMileageCONPET
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Research group Energy efficiency
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PACINI, Henrique, WALTER, Arnaldo, PATEL, Martin Kumar. Is ethanol worth tanking only when it costs 70% of the price of the equivalent in volume of gasoline?. In: Biofuels, 2014, vol. 5, n° 3, p. 195-198. https://archive-ouverte.unige.ch/unige:103047

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Deposited on : 2018-03-20

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