A study released by the Renewable Fuels Association suggests some retailers in the St. Louis, Missouri area may be price gouging drivers on E-85. The study was announced Tuesday and reviewed average E85 prices over this past summer. The Renewable Fuels Association reports the study found average E85 prices were 12 percent below gasoline prices at the wholesale level, but one percent above gasoline prices at the retail level. The Association’s CEO Bob Dineen stated “In many cases it appears they were pricing E85 above their branded gasoline for the sole purpose of making their gasoline prices look more attractive to the consumer.” He said by doing so, oil refiners could make the perception that consumers were rejecting E85. RFA tracked E85 and E10 gasoline prices at all nine retail stations selling E85 in the St Louis metro area. Across more than 250 observations during the summer, the average E10 retail price was $3.45 per gallon and the average E85 retail price was $3.47 per gallon. The association noted that based off wholesale price and typical markup, E85 could have been offered at retail for $2.44–2.55 per gallon.
The Association claimed the trend may be due to refiners’ requirements on retailers. Retailers affiliated with a brand have to abide by franchise agreements which often block unbranded E85 fuels. Further, the association said an increase in E85 sales would lead to a decrease in those branded fuels and risk failure to meet obligated sales marks by required by oil refiners. The study points out there is little price competition in the St Louis market in terms of E85 and retailers may be using decoy pricing to make other fuel options more attractive.
Source: NAFB News