No wonder ethanol producers are begging for billions at the government trough (see my previous post). They’re paying a bunch for the corn they want to burn, and they’re being paid little for the less-energy-intensive fuel they produce. The ethanol plants that have shut down recently can attest that it’s not a good time to be in the food-for-fuel business, at least not until their number gets called for a bailout.
The WSJ reported yesterday:
…corn prices are too high to allow the 80 cents left over from the sale of each bushel that the “very best” ethanol factories need to cover chemical, labor, handling and depreciation costs, let alone the $1.20 a bushel an average factory needs.
Marty Foreman, analyst for Doane Advisory Services, said that in the summer, ethanol was selling as much as $1.75 a gallon less than gasoline at the pump. Now the situation has reversed.
The price of the crude-oil futures contract for February delivery fell 87 cents to settle at $40.83 a barrel Friday on the New York Mercantile Exchange, while February Nymex reformulated gasoline blendstock for oxygen blending futures, or RBOB, rose 2.30 cents to $1.1112 a gallon. February ethanol futures rose 3.2 cents to $1.685 a gallon on the Chicago Board of Trade.