Is Ethanol Cost Competitive with Gasoline?
The cost of producing ethanol depends significantly on the price of corn and natural gas; however, in general the net cost of production has historically been $1.00-$2.00/gallon. Reference:USDA’s 2002 Ethanol Cost-of-Production Survey The real cost of oil, including direct and indirect subsidies is estimated at between $5.60 and $15.14 per gallon or $80 to $150 per barrel of oil. Reference: National Defense Council Foundation, Rocky Mountain Institute, Economic Strategic Institute Fuel Ethanol and Gasoline Incentives and Subsidies Present law provides for a partial federal excise tax exemption of 51 cents per gallon of ethanol blended into gasoline. For example, fuel blended with 10 percent ethanol receives a tax credit of 5.1 cents per gallon. Petroleum blenders receive this tax credit. Reference: Energy Policy Act of 2005 A recent study by the U.S. General Accounting Office found that since 1968 the oil industry has received approximately $150B in tax incentives. By contrast, the eth
