How Ethanol Is Actually More Expensive Than Petrol
India has already achieved its E20 blending target. All bunks now sell 20 percent Ethanol-blended petrol. Furthermore, E85 fuel (85% Ethanol-blended petrol), has also been introduced in the country. Here’s a detail that many would tend to overlook: ethanol is silently making commutes more expensive for the end-user. Even the E85 is expensive in the long run. High procurement costs of raw Ethanol and its lower energy density are the underlying reasons for this. Let’s take a closer look.
Let’s start with the procurement costs of Ethanol. Data released by the Ministry of Petroleum and Natural Gas states that the average procurement cost of ethanol has surpassed that of refined petrol.
A report from August 2025 states that the weighted average cost of ethanol then was Rs 71.32 per litre in Delhi. The base petrol price back then was just Rs 52.83 per litre and retail price was Rs 94.77 per litre. Clearly, the ethanol procurement prices were higher than those of pure petrol. More recently, petrol prices have gone up further.
At the time of writing, the base procurement price of petrol in Delhi is estimated to be in the ballpark of Rs 74.97 per litre- an increase of Rs 22.14 over the previous figure. For Ethanol, the procurement price has remained relatively steady. It sits in the ballpark of Rs 71 per litre. These prices are being regulated under an administered price mechanism set by the Central Government.
The base procurement price of Ethanol depends on the feedstock that it is made from. Maize-based Ethanol now commands Rs 71.86 per litre whereas the C-heavy molasses-based Ethanol costs Rs 57.97 per litre.
Latest data reveals that maize accounts for nearly half of the total Ethanol produced in India. In the second place are sugarcane-based feedstocks which command a procurement cost of Rs 65.61 per litre.
The blending program seems to be dealing with one big challenge- high procurement prices of Ethanol, and that is preventing the end user from getting sizeable price benefits on blended petrol.
Many had previously voiced concerns around the pricing disparity and called to bring the price of E20 petrol down. The ministry had dismissed these, citing rising procurement costs as the reason.
Due to rising ethanol procurement costs, E20 petrol prices remain high- Rs 102.12 per litre in Delhi. Even E85 is priced at Rs 82.12 per litre. A more serious factor that makes ethanol-blended fuels expensive in the long run is ethanol’s lower energy density.
Compared to pure petrol, it has roughly 30 percent less energy density. This essentially means the real-world fuel efficiency will be lower than pure petrol. (Compatible) Vehicles running on E20 petrol are likely to experience a 6-7 percent drop in fuel efficiency. Less mileage essentially means more frequent fuel stops and more money spent on fuel.
Vehicles running on E85 fuel will be more prone to this. Called Flex Fuel Vehicles (FFVs), they are expected to deliver fuel efficiencies typically lower than regular petrol cars by 20% -30%. Reason? High Ethanol content and its lower energy density. The engine will need to burn more fuel to produce the same result.
For the end customer to benefit in the form of lower operating costs, E85 prices have to be set low enough to offset costs incurred by the increased fuel consumption. That, unfortunately, hasn't happened yet. It may, in the coming years. For now, Ethanol continues to be more expensive to use than pure petrol.
That said, the blending program definitely has its advantages. It has helped in reducing India's crude oil imports. Ethanol-blended fuels burn cleaner than pure petrol and have lesser emissions as well.