Ethanol

Two views on current Ethanol production. From AgWeb:

Ethanol Production Reaches All-Time High
The Renewable Fuels Association (RFA) has announced that U.S. ethanol production increased in June to 318,000 barrels per day (b/d), an all-time record. That is an increase of 25,000 b/d from May and a rise of nearly 28% from June 2005.

Demand for ethanol also rose to record levels in June at 395,000 b/d. That represents a 46,000 b/d jump from May and an increase of more than 42% from the same period a year ago.

�The U.S. ethanol industry has responded to the challenges of the President, the American public and the marketplace to increase the supply and availability of this cleaner-burning fuel,� said RFA President Bob Dinneen. �As a result, we are reducing our dependence on foreign petroleum, helping preserve air quality standards in America�s most polluted regions, and revitalizing economies in hundreds of rural communities around the country.�

Currently, 101 ethanol biorefineries nationwide have the capacity to produce more than 4.8 billion gallons annually. There are 42 ethanol refineries and 7 expansions under construction with a combined annual capacity of nearly 2.9 billion gallons.

And looking at the same numbers with a different perspective. From Seed Magazine:

The Battle between Food and Fuel
Exploding demand for ethanol could inflate the price of food and threaten the world's hungry

In 2005, Iowa grew over 2 billion bushels of corn. That's nearly 20 percent of the nation's crop, more than any other state, and many other countries, managed to produce.

Not content with accepting government subsidies to produce corn at cost, Iowa is increasingly trying to transform its cash crop into liquid gold by becoming a leading producer of ethanol. By the start of this year, Iowa produced more than a billion gallons of ethanol, and its production capacity is slated to expand by hundreds of millions of gallons. The state is turning corn into fuel so fast that by the end of next year, Iowa will actually suffer a crop shortage.

The Seed Magazine article is quite detailed (three pages). This is a complex issue. The cost to produce Ethanol is very close to what it can be sold for at the pump so without the high level of government subsidies and tax cuts it currently enjoy, it would be a non-starter. The government subsidies are causing a corn shortage so the cost of meat and corn derived foods will rise. All for a fuel that may well take more petroleum energy to produce than it will yield.