It should be based on costs, and ethanol is
a dollar cheaper even including the tax credit
BIG OIL gets. It cost farmers here about 300 bucks to
do an acre of corn.Get 140 bushels an acre of which
1/4 will be for ethanol, and 3/4 for the rest.
The ethanol part is 35 bushlels makes 90 gal ethanol
worth 250 bucks and other products worth the same.
The other 3/4 or 105 bushels is about 6000 lbs
of cattle feed that makes 1200 lbs of meat and
other animal by-products.Meat worth $3000, by-
products a hundred. So what do we have for $300
put into an acre by a farmer, over $3500 of which
if corn is 4 bucks the farmer grossed $560.Finally
getting more......than he put in. Value increased
10 above farm level icosts seems very good,
to me. This figuring is a breakdown
based on estimates of 1/4 of corn crop used
in ethanol plants. You see the ethanol dollars is
a small part of cost and profits on the whole corn
crop, but the big factor is what food middlemen do and speculators are doing to the the prices based on all
the rumors and controversy...Ed
According to your numbers, ethanol is $2.77 a gallon wholesale. But since ethanol has only 70% the fuel value of gasoline it really costs $3.96 a gallon.
The current wholesale gasoline price is only about $2.40 a gallon.
That makes gasoline $1.56 cheaper than ethanol.
If speculators can sell corn at $5.00 a bushel and if they sell all the corn they contract to buy, then $5.00 a bushel is the correct market price for corn. Would things be any different if there were no speculators and farmers sold the corn directly to the refineries? Would farmers sell the corn for less simply because farmers are nicer than speculators?
If they did there would soon be a shortage of corn on the market.