Is ethanol expensive to produce?
No. Ethanol costs about $1 a gallon to produce at typical facilities. In 2004, ethanol was selling for $1.40 a gallon wholesale. However, prices spiked higher recently because oil companies mismanaged the switch to ethanol as a replacement for the additive MBTE. Once demand and supply reach equilibrium, it is projected that E85 can profitably wholesale for $1.40 a gallon without subsidies.
