Motoring lobbyist the AA has cast doubt on claims by independent fuel retailer Gull that it undercuts rivals on price.
In an article in its magazine, Directions, the AA reveals details of a test comparing Gull's ethanol-blended fuel with mineral-only fuel. It claims the test shows that, because biofuel is less efficient, it would have to be 15 cents a litre cheaper than mineral-only petrol before motorists saved any money.
Biofuel blends ethanol, derived from cooking oil or agricultural byproducts, with mineral petrol, derived from oil.
Gull is the main player in retail biofuel - almost all other petrol is 100 per cent mineral based.
Australian-owned Gull markets itself as cheaper than its rivals. Its biofuel product, which is sold at 17 of the 50 petrol stations that it supplies, is generally its cheapest, about 5c a litre cheaper than its rivals.
In December the AA compared how far 15 litres of regular unleaded petrol would take a 2007 Honda Civic, compared with 15 litres of Gull's E10 petrol, which is 10 per cent ethanol.
The Civic travelled 205 kilometres on mineral petrol, or 13.66km a litre, while on the ethanol blend it drove 190km, or 12.66km a litre.
Based on an average motorist driving 14,000km a year, the AA said using the biofuel would cost an extra $110 a year.
"Not all fuels are created equal and the lowest price is not necessarily the lowest cost in the long run," AA Petrolwatch spokesman Mark Stockdale wrote.
Gull managing director Dave Bodger said the test was "unscientific".
The company had asked the AA where the fuel was bought, how it was transported and whether the car had previously used biofuel, and had not been given answers.
"We've got lots of questions about it, but when you do a one-off test you get very, very different results."
Gull's rivals have privately complained for years that they did not believe a straight comparison between biofuel and mineral petrol was fair.
Z Energy chief executive Mike Bennetts welcomed a report which he said ''acknowledges what we have always known - that petrol blended with ethanol can increase a vehicle's fuel consumption and deliver significantly less value for money'.'
He added: "We've got nothing against ethanol and acknowledge that it can, depending on how it is produced, reduceCO2 emissions. But our customers are concerned with value and what this report shows is that there is a disconnect between the pump prices for ethanol blended fuels and the value they deliver."