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phase separation occurs, the ethanol is taken out of the gasoline and the octane drops do to the lack of ethanol. It's best to run high ethanol contents because E85 can absorb a lot of water. Water mixes with ethanol, ethanol mixes with gasoline, but gasoline doesn't mix with water. Condensation that drops into your fuel containing ethanol is absorbed by the ethanol. If the amount of water absorbed by the ethanol gets too great, the gasoline starts to see the ethanol more as water and the ethanol/water mix separates out, just as water would separate out of gasoline. Ethanol doesn't go bad, water and ethanol doesn't go bad. There are many people who pay large amounts of money for small jars of mixes of ethanol and water that is 20-40 years old. Then they drink it. It's the gasoline that goes bad. The more ethanol the better. In my opinion, mrfred is pretty sharp about ethanol and here he talks about the amount of water that E85 can absorb: https://www.evolutionm.net/forums/e85-ethanol/689466-e85-shelf-life.html
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