Consumer Decision: Purchasing a Flex Fuel Vehicle

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Consumer Decision Purchasing a Flex Fuel Vehicle

• ABJ2
• Adam Knepper
• Blake Funke
• Jamie Harpenau
• Jeff Thomsen

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Project Statement

• We analyzed the different factors and components
  of a Flex Fuel Vehicle. The areas we analyzed
  were Flex Fuel Vehicle costs, ethanol subsidies,
  environmental rewards, and the economic benefits
  if E85 in Iowa. By comparing these factors we
  made a consumer decision on buying a Flex Fuel
  Vehicle.

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Justification

• E85 is gaining popularity
• Ethanol production in the United States is
  booming and is becoming very high in demand
• E85 is relatively new technology
• Few analysis evaluate the Advantages and
  Disadvantages for the consumer in the same study

Source Renewable Fuels Association,U.S. Energy
Information Administration
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Background Information

• E85 A gasoline blend of 85 ethanol and 15
  petroleum.
• Flex Fuel Vehicle A vehicle capable of running
  on any blend of gasohol up to 85 ethanol.
• There are currently 34 gas stations that sell E85
  in Iowa.
• The State has introduced a proposal that will
  require all gas retailers make their equipment
  compatible E85

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Flex Fuel Vehicle

• There is no price difference between a FFV and a
  regular gas vehicle
• FFV uses a sensor that detects the blend of
  ethanol in the fuel systems and adjusts the
  engines timing and air/fuel ratios
• There is on average a 5 mpg less with a FFV
  depending on your driving habits

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Fuel Cost
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Prices on April 24th, 2006
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Environmental Rewards

• Oxygen added to gasoline equals lower greenhouse
  gas emissions
• Ethanol is biodegradable
• Made from renewable resources
• Corn, cheese whey, assorted grains, wood waste.

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Ethanol Emissions as Compared with Gasoline
Emissions
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Economic Benefits of Ethanol in Iowa

• Iowa produces about 938 million gallons of
  ethanol annually
• As of right now, 320 million bushels of corn
  grown by farmers are sold to ethanol plants each
  year
• When construction is finished on the new ethanol
  plants, volume will raise to 495 million bushels
  of corn purchased by ethanol plants annually
• Increase average corn prices by .04/bu. and up
  to .20/bu.
• Ethanol generates more than 4 billion in
  economic activity to Iowa only 1 billion shy
  of Iowas total budget

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Ethanol Plants Under Construction

• Total of 5200 jobs for Iowans created by the
  ethanol industry
• A 100 million gallon ethanol plant could create
  2,250 local jobs

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Government Assistance

• Partial Tax Exemption - Ethanol
• 52 cents per gallon
• Oil Subsidies
• Real cost of gasoline - 7.00 ?
• Renewable Fuels Standard

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Net Energy Value

• Output Divided by Input
• Differing Views
• Pimentel Study -21, 70 more input
• USDA Studies 25, 40
• Methodology and Energy Values
• Corn Production, Corn Transport
• Ethanol Production, Co-Product Credit

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E85 Powered Flex Fuel Vehicle

• Pros
• More jobs in Iowa
• Farmers get better grain prices
• Fewer harmful emissions
• Cons
• Fewer Miles per Gallon
• Total cost is higher

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Conclusion

• Purchasing a Flex-Fuel Vehicle and using E85 has
  both benefits and drawbacks.
• A decision whether to buy a Flex Fuel Vehicle
  (FFV) depends largely on what is important to the
  consumer.
• If a consumer is only concerned with operating
  costs of the vehicle then purchasing a FFV and
  using E85 would not be important.
• If the consumer is concerned with the environment
  and economic benefits of using E85, then
  purchasing a FFV would be in their best interest.

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Questions?