The ethanol bust

– I’ve never had much faith in Ethanol as an alternative fuel.  To me, most of what drives us towards thinking Ethanol might be a good idea is our denial of another idea. The idea that we just can’t continue to sustain oil-based economies like the ones we are currently living in.

– Nobody wants to go backwards into a time when they have less.  So every idea that comes up that suggests that we might not have to, is embraced warmly.

– But there’s only so much land to grow crops on and finding enough to grow food for consumption is increasingly a problem so how can we take large tracts of land out of food production to grow corn for ethanol production?   

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The ethanol boom is running out of gas as corn prices spike.

By Jon Birger, senior writer

NEW YORK (Fortune) — Cargill announces it’s scrapping plans for a $200 million ethanol plant near Topeka, Kan. A judge approves the bankruptcy sale of an unfinished ethanol plant in Canton, Ill.. And that was just Tuesday.

Indeed, plans for as many as 50 new ethanol plants have been shelved in recent months, as Wall Street pulls back from the sector, says Paul Ho, a Credit Suisse investment banker specializing in alternative energy. Financing for new ethanol plants, Ho says, “has been shut down.”

How can the ethanol industry be slumping only two months after Congress passed an energy bill most experts consider a biofuels boon? The answer is runaway corn prices.

Spurred by an ethanol plant construction binge, corn prices have gone stratospheric, soaring from below $2 a bushel in 2006 to over $5.25 a bushel today. As a result, it’s become difficult for ethanol plants to make a healthy profit, even with oil at $100 a barrel.


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