Cheaper gas in the pipeline?

Ethanol manufacturer Bioagra plans to launch ethanol-based E85 gasoline, a cheaper alternative to Pb95, the most popular fuel on the Polish market. The new fuel could be available at gas stations as soon as H2 2010.

E85 has become popular in Sweden and is also gaining ground in certain parts of the US. In Poland, however, there is little retail fuel infrastructure for the product and there are relatively few vehicles with engines capable of using it.

E85 fuel requires a flexi-fuel engine installation, which is available in some new cars, such as Volvos, Saabs and certain Renault and Ford models. This feature, however, can increase the price of the vehicle by up to zł.6,000. In used cars the installation can cost as much as zł.2,500. However, if – as is sometimes estimated – E85 costs around zł.0.50 less per liter than Pb95, the expense could potentially be recouped in about a year.

The success of the new fuel depends on demand, which could be supported in part by tax breaks and other benefits for companies or individuals. According to Zygmunt Gzyra, a member of Bioagra’s board, it is high time to embrace ethanol-based fuels.

“[This] fuel is also worth considering for Polish city buses, which could bring savings to municipal budgets,” Mr Gzyra told WBJ. He declined to give an estimated price per liter for E85, saying that it was too early.

If E85 turns out to be a success, Polish oil giants Orlen and Lotos would be ready to launch production as well. “First the demand has to be high enough that production is economically justified,” Beata Karpińska, a spokesperson for Orlen, told WBJ. The company is currently researching the market’s potential.

Marcin Poznań