Stories tagged with "corn prices"
Updated Corn Ethanol Economics
Posted by Robert Rapier on June 25, 2008 - 10:00am
Topic: Alternative energy
Tags: corn prices, economics, ethanol, ethanol prices, investing, natural gas, original [list all tags]
| Executive Summary: The current cost to produce a gallon of ethanol is approximately $3/gal. The current price of ethanol is $2.86/gal, which explains why ethanol producers are shutting down. If corn and natural gas prices remain high, I think ethanol has to rise to something like $3.40-$3.60/gal to make it worthwhile to ethanol producers. So, if I was a commmodities investor, I would probably go long ethanol right now. The only risk factors I can see - given that there is a mandated (and rising) demand for ethanol - is if corn or natural gas prices collapse. The other remote possibility is that that mandate is repealed, but I don't see that happening. |
A Vicious Circle
Posted by Robert Rapier on March 12, 2008 - 7:04pm
Topic: Policy/Politics
Tags: corn prices, environment, ethanol subsidies, food prices, mandates, subsidies [list all tags]
A few days ago, someone here posted a link to a story about skyrocketing farmland prices in the Midwest. It really made me angry to think about the inflationary chain reaction and the vicious chain of events our politicians have set into motion with these ethanol mandates. It made me even angrier to think that the few who benefit from these policies defend their right to siphon money from the rest of us and into their pockets. (I will be the first to say that surging energy prices are a big component of surging inflation, but with the ethanol mandates we are throwing jet fuel on an already raging fire).
This all started out innocently enough. Oil prices were climbing. Our energy production was shifting to an ever greater extent to countries that are hostile to the U.S.
So, Step 1 in the chain is to propose a solution:
1. The government should subsidize ethanol production to encourage production of home-grown fuels, which will enhance energy security and create jobs in the Midwest.
The Economics of Corn Ethanol
Posted by Robert Rapier on February 6, 2008 - 11:30am
Topic: Alternative energy
Tags: corn prices, economics, ethanol, ethanol prices, natural gas [list all tags]
Someone e-mailed a few days ago and asked about the present economics of corn ethanol. I did a few calculations, and thought the results were interesting enough to share. This exercise should make it clear which factors have the biggest impact on corn ethanol profitability – and why corn ethanol producers are presently struggling.
Consider this a supplement to Stuart Staniford’s comprehensive essay Fermenting the Food Supply. Stuart’s essay goes into great detail on the factors underlying the economics. In my essay, I take a snapshot of a corn ethanol plant based on current prices for corn, natural gas, and by-products. (Note that because this is a snapshot, the numbers will change over time. But you should be able to use the methodology here to roughly calculate the economics at any point in time.)


k Nation (Jim Kunstler)






GAIA Host Collective