According to this article the U.S. will have an excess of ethanol in the 2007-2008 time period, leading to a virtual stoppage of imports and the need for exports.
This prospect of exports is made difficult because the cost of producing corn ethanol in the U.S. is $1.10 to $1.40 per gallon, compared to $0.90 per gallon for sugar ethanol in Brazil, the largest exporter of ethanol. At these production costs, U.S. corn ethanol is competitive with $55.00/barrel oil. However the U.S don't have significant storage capacity for ethanol, which creates a need for exports.
Thus we will have a period of time when the need for more E85 stations and increased production of flex fueled vehicles will become desirable. The economic reason for expanding the ethanol market will be largely driven by the desire to reduce oil imports. Non-economic reasons, such as reduced global warming, are usually not important in the market place unless mandated by law.
This will continue until the cost is ethanol is reduced by lower production costs through the use of improved technology, primarily cellulose ethanol technology. Does this mean we should maintain our $0.55 tariff on imports of ethanol, except for duty free ethanol from the Caribbean? or does it mean that we should maintain our subsidies for the production of ethanol?
I believe the subsidies and tariff should be reduced or eliminated depending on the price of oil to put pressure on American producers to keep their costs low and still provide a motivation to produce more ethanol to reduce our imports of oil. Once the cost of cellulose ethanol is lower than corn ethanol subsidies on corn ethanol should be totally reduced to keep farm acreage from being overused for ethanol production. At the oint that ethanol becomes competitive with gasoline I woud support a mandate for 10% ethanol in gasoline with the percentage increased as more vehicles become capable of using higher percentages.
No problem. Put the ethanol in beverage bottles, label it "Vodka", and ship it to Russia as discount spirits.
Posted by: redgrass | October 09, 2006 at 03:36 PM
Ethanol from corn is no solution to anything. I'm with red.
Might as well drink that white lightning to kill the pain of watching mistaken history repeat itself, if this is considered to be any kind of global climate change solution or cure for imported oil.
Posted by: amazingdrx | October 10, 2006 at 10:02 AM
Khosla says his plant will make ethanol for 0.75 cents
Posted by: Dave | October 11, 2006 at 07:35 PM