If we were to ramp up ethanol production tomorrow to full capacity, how far would the price of oil drop?

Ethanol would have virtually no effect on the price of oil. Diesel is what's driving the price right now.

In recent weeks, we've had a build in diesel inventory in the U.S., despite diesel shortages in China, India, South America, and even Saudi Arabia, in addition to a slew of smaller countries. It's the build in diesel inventory that is driving down oil prices here. (Plus a determination to cut oil inventories to the bare bones minimum.)

Meanwhile, most of the places with diesel shortages continue to refrain from buying due to price controls.

Essentially, much of the rest of the world (the part of the world with the largest demand growth) has started de facto rationing (many to "control inflation") even at the expense of their own economic growth. China, for example, recently organized its aluminum producers to cut production by 10% until after the grain harvest.

I think a huge part of the price volatility in the markets is coming from government interference in the markets, both in the U.S. (the spec witch hunt and threats to start emptying the SPR) and elsewhere (China's price controls, etc.)

The markets are becoming a place where, instead of betting on supply and demand, you're forced to place bets on the whims of politicians. It truly is becoming a poker game rather than a market, so governments are achieving exactly the opposite of what they'd want to achieve if they were smart. There's no way to get accurate price signals when you're betting on the moods of a handful of powerful people.

Without accurate price signals, oil producers can't plan risky production, and consumers can't make rational investments in efficiency.

A number of people around here have predicted that free markets would be an early casualty of the energy crisis. I think they're being proved correct.

I doubt very much that this CFTC report will change anything, since everything they said in this report has already been said in other recent CFTC reports.

I agree Muskie - ethanol production is a good start to ensure that we don't depend forever on foreign oil - it may not the be sole solution, but investing in biofuels and alternative energies are the way to go in this time of energy uncertainty.

Ethanol does not scale to the level necessary. Ethanol may play a very small place in stabilizing our energy future but we will not be able to continue the "happy motoring utopia" in which we have all grown up by using ethanol.

Change is coming whether we like it or not. We can either adapt to that change by choosing from the available paths to us or nature will select one path for us, whether we like it or not.