Oil Ministry States Ethanol Costs More Than Petrol

Ethanol pricing has stirred public debate after the oil ministry confirmed it is now more expensive than petrol. While many expect ethanol-blended fuel to cost less due to its lower energy content, recent procurement trends suggest otherwise.

Ministry’s Statement on Ethanol Pricing

The oil ministry addressed concerns that ethanol-blended petrol should be cheaper than pure petrol. The argument for lower prices, they noted, originated from a Niti Aayog report in 2020-21, when ethanol prices were indeed lower. However, procurement costs have since increased, changing the price dynamics.

Current Procurement and Retail Costs

As per the ministry’s data, the average procurement price of ethanol, including transportation and GST, is ₹71.32 per litre. This is now higher than the cost of petrol before taxes and dealer commissions. In Delhi, petrol retails at ₹94.77 per litre, which comprises a base price of ₹52.83 along with applicable taxes and commissions.

Energy Content and Fuel Economy Impact

Ethanol contains about 33% less energy than petrol, according to the US Energy Information Administration. This reduced energy density means fuel economy typically declines when ethanol blends are used. For example, using E10 (10% ethanol blend) may lower vehicle fuel efficiency by about 3%, while E20 (20% ethanol blend), common in India, could result in an estimated 6% drop in mileage.

Public Concerns Over Efficiency Loss

The lower fuel economy from ethanol blends has led to public calls for cheaper ethanol-blended fuel. Critics argue that since E20 fuel yields fewer kilometres per litre, it should be priced lower to compensate for the efficiency loss.

Ministry’s Response to Fuel Efficiency Debate

The ministry dismissed claims that E20 causes a drastic reduction in fuel efficiency, stating that mileage depends on many factors, not just the fuel composition. Road conditions, vehicle maintenance, and driving behaviour also play significant roles in determining efficiency. 

Read More: Ethanol Blending in Petrol Target Met: How It Affects Your Vehicle's Mileage and Maintenance! 

Conclusion 

The oil ministry’s data shows that rising procurement costs have pushed ethanol prices above petrol, altering earlier price expectations. Despite lower energy content, the ministry maintains that multiple factors influence vehicle mileage beyond the type of fuel used.

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