First, however, the lastest grim news from Fortune: “The ethanol boom is running out of gas as corn prices spike.” Yes, “plans for as many as 50 new ethanol plants have been shelved in recent months.” Why?
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.
If you can’t make money with oil at $100 a barrel, you are not much of an alternative fuel.
But I know what you’re thinking — if corn ethanol is so bad, what’s wrong with plants being scrapped? Well, the corn ethanol business is here to stay. The corn ethanol mandate from the most recent energy bill requires doubling supply from current levels. Fortune explains what that means:
What probably has changed permanently are ethanol economics. The days of cheap corn are over, and the industry’s new, lower profit margins clearly favor ethanol leader Archer Daniels Midland over all the smaller producers like Verasun, privately held Poet Energy and the many, many farmer-owned ethanol cooperatives. ADM’s massive 200 million-gallon-a-year ethanol plants simply have better economies of scale than their 50-million-gallon-a-year rivals. And the fact some of ADM’s big plants run on coal instead of natural gas makes ADM’s cost advantage that much greater.
Just what we need, a shakeout that makes ADM richer and corn ethanol even dirtier.
So just how bad is corn ethanol? As bad as a movie reviewed by Opus:
George Phblat’s new film, ‘Benji Saves the Universe,’ has brought the word ‘BAD’ to new levels of badness. Bad acting. Bad effects. Bad everything. This film just oozed rottenness from every bad scene … Simply bad beyond all infinite dimensions of possible badness …
Well maybe not that bad, but Lord, it wasn’t good.
One last thing, as Tom Philpott makes clear, the blame for this mess rests first and foremost on a certain big company. Rather than naming names, let’s just say its initials are an anagram for M.A.D.