Do Americans Want Ethanol? A Comparative Contingent-Valuation Study of Willingness to Pay for E-10 and E-85

A nationwide contingent-valuation survey of consumer preferences for consumer fuel blends E-10 (a blend of 10% ethanol and 90% gasoline for use in standard vehicles) and E-85 (a blend of 85% ethanol and 15% gasoline for use in flex-fuel vehicles) was conducted to estimate willingness to pay (WTP) and identify key characteristics driving demand. Results indicate that overall perceptions of ethanol are positive, but ethanol is not the globally-preferred transportation-energy alternative, even among consumers with a positive WTP. Results indicate also that demand for E-85 is more price inelastic than E-10, with this result driven by consumers with no preference for E-10 but strong preferences for E-85. Finally, results also indicate that those consumers who are unsure about the micro-level benefits of E-85 are nonetheless more inclined to pay a premium