A Rand Corporation study by John Graham and two colleagues finds that, from a consumer standpoint, hybrids and diesel vehicles beat E-85 vehicles by a country mile, at least under expected gas prices.

The study compares the consumer and societal benefits and costs of three alternatives to the gasoline-powered internal combustion engine for the 2010-2020 period: gasoline-electric hybrid technology, advanced diesel technology, and vehicles powered continuously by a mixture of 85% ethanol and 15% gasoline (E85), where the ethanol is produced from corn.

I posted a USA Today review of the study last month, but at the time I was unable to track down the study itself.

From the consumer perspective, the study estimates the net present value (NPV) of the different vehicle types, taking into account only the technology cost, fuel savings, mobility, and performance. The researchers find that:

“For a passenger car, the private NPV was $198 for the hybrid, $460 for the diesel, and -$1,034 for the vehicle that runs on E85. For the SUV, the NPV was $1,066 for the hybrid, $1,249 for the diesel, and -$1,632 for E85.”

 These results are price sensitive. They assume fuel prices of $2.50 per gallon of gasoline, $2.59 per gallon for diesel fuel, and $2.04 per gallon for E85 (including the current 51-cent tax credit for use of ethanol in motor fuels). In a high gas-price scenario, where gasoline costs $3.50 a gallon, the E85 vehicle has greater NPV than both the hybrid and the diesel.

Which again raises the question–what need is there for an ethanol mandate? If gasoline prices average about $2.50 a gallon during 2010-2020, then E85 is a money-loser for consumers. If gasoline stays at $3.50 or more during that period, E85 will be attractive to consumers without politicians trying to pick winners and losers.