1. We are seeing food problems with an ethanol mandate currently of 7 billion gallons. The government has dictated we us 36 billion gallons by 2022. Where will this be grown?
2. If ethanol is important and helpful, why the large tariffs on Brazilian ethanol?
3. Even with the heavy government subsidies, a new ethanol plant is now not profitable. Why build any more. Guess who will have their hands out for heavier subsidies.
Following is an earlier article. Corn prices have risen since it was written.
Fortune Feb 28, 2008
Lower profit margins clearly favor ethanol leader Archer Daniels Midland. And the fact some of ADM's big plants run on coal instead of natural gas makes ADM's cost advantage that much greater.
plans for as many as 50 new ethanol plants have been shelved in recent months
Spurred by an ethanol plant construction binge, corn prices have gone stratospheric, soaring from below $2 a bushel in 2006 to over $5.25 a bushel today. As a result, it's become difficult for ethanol plants to make a healthy profit, even with oil at $100 a barrel.
$4 corn is a result of the 31 new ethanol plants built since 2005, but investors won't keep bankrolling new plants if $4 corn keeps eating up their profits
the ethanol business isn't going away, at least so long as the federal government continues to mandate the use of biofuels -- 36 billion gallons a year by 2022, up from 7 billion last year-and impose hefty tariffs on imported ethanol. There is an oversupply of ethanol right now, but the yearly increase in the biofuels mandate means that demand will eventually catch up with supply.
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