×

Ethanol Fights Back

ETHANOL FIGHTS BACK

Everyone is blaming ethanol for everything. Producers have gone from being heroes to zeroes. On Friday, I have three stories you can see here, showing what it's like to be in that industry now. Two years ago, corn was $2 a bushel and margins were $2 a gallon — and everyone and their brother wanted in.

Now corn is $6 and margins are 10 cents — or negative, for some operators.

The ethanol industry's defense is this: Don't blame us for $125 oil. They say ethanol is actually making gasoline cheaper (it's also subsidized by more than 50 cents a gallon).

And the industry claims ethanol's corn needs are only responsible for 2-3 percent of food inflation. You can't blame rice and wheat prices on ethanol. (Well, maybe some wheat, as farmers switched to corn.)

One of the more compelling arguments I heard was against lifting the tariff against cheaper Brazilian ethanol. Brian Sherbacow, former COO of the now-bankrupt Ethanex, says that would only make us dependent on yet another foreign country for energy, which would defeat the whole purpose of our national investment in homegrown biofuels.
(Contd.)

____________________________________
Ethanol Players:

Pacific Ethanol

Verasun Energy

Archer-Daniels-Midland

____________________________________

Make no mistake, while corn sits in the silos, ethanol producers feel they're sitting in missile silos, as everyone from environmentalists to Big Oil to non-corn farmers to angry consumers launch verbal attacks. What a difference two years makes.

Questions? Comments? Funny Stories? Email funnybusiness@cnbc.com