Comment: Switching to Snake Oil
..."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..."