Comment: Switching to Snake Oil

Logo for The Guardian newspaper

..."Cutting oil consumption in any significant manner means increased reliance on ethanol and other biofuels because they are easily the most cost-competitive alternative to gasoline on the market. Accordingly, it's worth noting that the president's own Department of Agriculture reports that ethanol costs about $2.53 per gallon to produce - even with the subsidies. Without them, economist Doug Koplow calculates that production costs would be at least $1 per gallon higher. Accordingly, the president's plan would increase fuel prices because gasoline costs only about half what ethanol costs on a Btu basis in wholesale markets.

Government support is unlikely to bring corn ethanol costs down because it is the very definition of a mature technology. Alas, the manufacturing costs associated with producing 200 proof grain alcohol have proven fairly fixed over time..."