Posted by sws55 on March 06, 2011 at 08:42:00 from (173.29.40.52):
In Reply to: End of ethanol.... posted by muckfarmer on March 06, 2011 at 02:47:08:
Ethanol subsidies were established back when corn was close to $2, US farmers were struggling. The US dollar was high and there wasn't as much export demand for US grain. Oil was $16 to $24 a barrel. At that time using cheap grain to make ethanol and to help a struggling industry (agriculture) made sense.
Times have changed. Now The US dollar is low. There is a strong export demand for US grain. Corn is now $6. Agriculture has recovered and is now one of the strongest and most profitable industries in the country compared to everyone else in the country.
Oil is $100 a barrel and rising. The price of corn has increased 200% to 300% since subsidies were established, but oil has incresed 400% to 600% in the same time. The ethanol industry should be able to stay profitable on it's own now. So it will continue to consume corn and help push corn prices higher.
Yes, dropping the subsidies will hurt the ethanol industry a little, but it isn't needed anymore. With the strong export market a farmer won't notice much difference.
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