Can India's New E85 Fuel Help Reduce the Burden of Rising Fuel Prices?

One of the largest fuel related stories today is India's introduction of E85 fuel, which is a 85% ethanol/15% petrol mix. The government has given a heads-up that E85 would be available for sale at an approximate rate of ₹20 per litre less than regular E20 petrol - which could make it a cheaper option for consumers. It is part of the Indian government's strategy to cut dependence on imported crude oil, and encourage the use of better quality, less polluting, indigenous fuels.

The development is important because it seems to occur at a time when fuel prices are under pressure due to the high crude oil prices as well as the geopolitical tensions in the Middle East. Petrol and diesel have been holding steady in recent days but fears are there that global oil prices could keep going up, causing transportation cost and inflation to rise. The RBI has also cautioned that while the prices of fuel might contribute to the inflationary pressures, it will limit the economic growth.

For most consumers, it is more than just the fuel itself. India could cut its dependence on imported oil, if the ethanol-based fuels were to be accepted and more flex-fuel vehicles on the market, and provide cheaper alternatives to the motorists as well. Thus, if E85 is to be successful, its impact on future fuel prices, energy security and environmental sustainability in this nation will be significant.