E85 gets worse mileage than premium gasoline, as well as midgrade and regular gasoline. Octane ratings don’t have a direct impact on fuel economy, and premium isn’t necessarily a better fuel for your car if it doesn’t require the high-grade fuel.
E85, which is 85 percent ethanol and 15 percent regular gasoline, has a lower energy density than regular gasoline; a car has to burn more E85 to go the same distance as a car with regular gasoline, which means worse fuel economy.
The mileage differences are explained in the Cars.com Green Buying Guide article, “E85: Will It Save You Money?”
“For example, the flex-fuel Chevrolet Impala equipped with a 3.5-liter V-6 engine gets an EPA-estimated (using the 2008 rating system) 18/29 mpg (city/highway) on gasoline and 14/21 mpg when burning E85. The acceleration is pretty much the same, but the car's range is shortened. In other words, you'll be filling the tank more often when using E85.”
For more information on E85 including pros and cons of the bio-fuel, see the Cars.com Green Buying Guide.
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I'm not a big fan of E85, but in fairness it should be pointed out that E85 does cost significantly less than regular gas. You'll have to do the math to figure out whether cheaper E85 combined with worse gas mileage saves you money over just buying regular gas. My guess is, no it doesn't. But maybe E85 is cheaper in other markets than it is whee i live.
I own a 2007 GMC Sierra extended cab and I have not found the horrible drop others speak about when using ethanol. I have only seen 1 mile drop per gallon and I have been using ethanol for a while. My driving varies a lot too. I drive a lot of highway and city mixed. I was getting 18.2 with regular unleaded, and now I get 17.2 mpg. I have the 5.1 liter V8.
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E85 has to be the one of the biggest scams ever foisted on the American public.