If you raise corn, are an investor in an ethanol plant, or bought you a flex-fuel vehicle to burn ethanol, your bubble may be about to burst after the election.
Pols will keep the ethanol subsidies of some 58 cents a gallon in place until the election, and keep out imports of cheaper Brazilian sugar cane ethanol into the U.S., until then.
But after there's no election threat for two years, Katie Bar the Door. As evidence continues to mount that ethanol causes more air pollution than regular gasoline, that it takes more energy and water to make than it returns in power to cars, and that it has badly skewed food prices by driving up the price of corn, pols are ready to back away.
Ethanol interests were already in trouble with high corn prices, which have moderated in recent weeks, and the bad credit conditions to be provide the operating money they need to keep their plants in operation. Without the 58-cents subsidy from Congress, which is likely to be cut or dropped althogether after November, cash flow will drop and profits will cease.
Suddenly ethanol will sell for more per gallon than gasoline, and the party will be over.
Natural gas, hydrogen and electricity, in the long term, are all better alternatives to gas or diesel powered cars, than ethanol. These facts will trump ethanol as the coming weeks and months unfold.
Watch out, and be prepared. You read it here first.
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