I’ve made my feelings on ethanol clear on more than one occasion (“Invest in Grass-Based Ethanol, Not Corn-Based Ethanol”). I don’t think it’s the viable alternative to gasoline everyone makes it out to be.
According to the Wall Street Journal, the ethanol slowdown may be coming sooner rather than later.
Ethanol’s frenzied growth over the past year is coming to a halt — at least for now.
The price of ethanol has fallen by 30% over the past few months as a glut of the corn-based fuel looms, while the price of ethanol’s primary component, corn, had risen. That is squeezing ethanol companies’ profits and pushing some ethanol plants to the brink of bankruptcy.
But it is the following that I’ve been expecting for quite some time:
[F]ood, cattle, poultry and other interests are quietly nudging lawmakers to pull back on subsidies that encourage ethanol production and have indirectly led to increases in food costs due to the increase in the price of corn and other grains.
The ethanol and environmental lobbies (as well as some short-sighted politicians and celebrity environmentalists) have been playing the game for years. It was only a matter of time before some of the adverse lobbies pushed back. The rising cost of corn and soy makes corn- and soy-fed animals that much more expensive to raise. That makes the animals’ milk and meat more expensive for us to buy. And for a fuel that is only marginally better than gasoline re: the environment?