If E85 Gasoline is Cheaper in Iowa, Then Why Are We Paying The National Average Price?

Question

The recent national average gas price is approximately $3.14 a gallon as of last week. E85 is manufactured here in Iowa and is supposed to cost less.
I don't believe manufacturing has anything to do with it. It has always been cheaper than the national average. Any ideas?

Answer 1

Iowa taxes ethanol at a lower rate than gasoline. The reason is that ethanol can be made from corn and corn is a top crop in the state. To promote the product, Iowa gives a tax break to ethanol products.
I saw a station yesterday (in Iowa) selling E85 as well as regular gasohol and gasoline. E85 was less than either of the other two products. Gasohol does contain ethanol but not as much as E85 so it made sense that E85 cost a bit less because of the tax.
Cross the river to Wisconsin or Illinois and you'll see a considerable price difference. Part of that difference is state taxes.

Answer 2

I'm not sure why you believe E85 would be less than traditional gasoline. Ethanol is more expensive than gasoline (about $4/gallon), it's only the state incentives which make it attractive at this time. You're actually getting a bargain thanks to your state government's attempts to create demand for a product whose success can mean millions for farmers and ethanol producers.

Moreover, it's the same reason two stations selling the same gasoline 5 miles away from each other can be 25 or more cents apart on price. Pricing strategies by the retailers play a huge role in how much you pay at the pump for any product, just like it does for anything else you buy. If youre willing to pay it, they're willing to charge it...

Answer 3

look at your sales tax..state tax....excise tax...and who knows what congress is doing....last week they were sleeping on the job.