Monday, May 15, 2006
The fuel, renewable and more environmentally freidnly than gasoline is already being used as a gas additive, replacing another additive that was found to pollute groundwater. The result: a squeeze on supplies that has doubled ehtanol's wholesale price, to $2.75 a gallo. With corn prices low and gas prices high ethanol's profit margin per gallon is at a record of more than $1. Last years energy bill requires gas marketers to sell at least 4 billion gallons of ehtnaol-blended fuel this year. Investors in ethanol plants will find themselves at the mercy of tow commmodity cycles: corn and gas. Corn prices over the next six years are likely to rise and ehtnaol rprices to fall resulting in a 25% drop in producers profits. What is the promise of ehtnaol replacing gas? WEll the likelyhood of this replacing gas is highly unlikely but the use of gas E85 which consists of 85% ehtanol would create better burning vehicles and less emissions, but in contrast will get worse mielage and become costlier in the end.