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119 comments on Updated Corn Ethanol Economics

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Nate Hagens on June 25, 2008 - 11:41am Permalink | Subthread | Parent | Comments top

Gasoline, corn and nat gas prices all rise and suddenly ethanol is not profitable - what a surprise!!! (this is the definition of low net energy gain technology - law of receding horizons.)

I disagree with Robert that ethanol is necessarily a buy. Many of the ethanol producers will continue to produce ethanol even at a 20 cent loss because it is cheaper than competely shutting down. Clearly some producers will shut down, but not enough for me to want to buy ethanol. Yet. (actually, out of principle, I would never buy corn ethanol futures (though in Wisconsin, I have little choice but to buy the actual product).

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Robert Rapier on June 25, 2008 - 4:50pm Permalink | Subthread | Parent | Comments top

I disagree with Robert that ethanol is necessarily a buy. Many of the ethanol producers will continue to produce ethanol even at a 20 cent loss because it is cheaper than competely shutting down.

Nate, some are shutting down, yet the mandate marches on. I think prices have to rise. Ethanol producers may continue to lose money, but ethanol itself should rise unless 1). Energy prices collapse; 2). Corn prices collapse; 3). The mandate is repealed.

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Nate Hagens on June 25, 2008 - 5:57pm Permalink | Subthread | Parent | Comments top

I don't strongly disagree with you - just pointed out that a good deal of production will stay online despite a loss. And at some finite price for ethanol the gas stations won't want it because customers will choose regular gasoline (if they can choose that is).

This whole thing is disheartening. You and I (and many others) have been writing for several years now how this is a spent bullet when we need dry powder in energy policy. Yet we never made a dent. If something as clearcut as this can't be rejected, what hope do we have on the tougher decisions?

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abelardlindsay on June 25, 2008 - 11:59pm Permalink | Subthread | Parent | Comments top

Gasoline, corn and nat gas prices all rise and suddenly ethanol is not profitable - what a surprise!!!

Here's a basic economics lesson for ethanol producers.

Profit - When the inputs are worth less than the outputs (Hint: this is what you're trying to achieve).
Loss - When the output are worth less than the inputs. (Hint: this should be avoided)

Moral of the story: Don't take expensive stuff (corn,oil and gas), expend a lot of effort and produce less expensive stuff (ethanol).
It's just not good business!

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119 comments on Updated Corn Ethanol Economics

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