The Pros and Cons of Ethanol

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Ethanol--an alcohol biofuel distilled by extracting sugar from corn, has triggered a great debate over recent years. Although this cleaner burning fuel is better than gasoline for the environment, it also has drawbacks, such as higher prices.

Ethanol Production and Uses

In addition to burning cleaner, ethanol's sludgy, protein-rich byproduct makes nutritious feed for animals--thus doubling the corn's usage. And studies show that a gallon of ethanol yields 33% to 67% more energy than it takes to produce that gallon of ethanol, making it an efficient fuel option. However, this estimate come from the United States Department of Agriculture (USDA), which may have a vested interest in promoting corn-based products. Even so, studies show that ethanol has a 20% to 30% smaller carbon footprint than gasoline.

Market Influences of Ethanol

About 40% of corn produced in the United States is consumed through ethanol production, which clearly impacts the price of the grain. While the price of corn averaged $2.50 for much of the 1980s and 1990s, it began climbing appreciably, after ethanol production skyrocketed. Interesting, since ethanol is corn-based, and gasoline is petroleum-based, both fuels tend to fluctuate together, given that the prices of their underlying commodities tend to move in the same direction.

Ethanol and Corn Subsidies

Ethanol producers received generous 45 cents-per-gallon governmental subsidy, prior to 2012. However, there was no slowdown in ethanol production after that subsidy ended. Consequently there continues to be a great deal of debate over government-required ethanol in gasoline and the importance of subsidized corn production for the biofuel in the United States.

Decision on Ethanol

There are two sides to the ethanol debate. On one hand, ethanol is a cleaner burning fuel than gasoline, and it lowers the price of gasoline as long as corn prices are low. However, the amount of corn used in producing ethanol impacts all consumers. The price of corn is likely higher than it would be without the ethanol requirement. Plus, there are other energy alternatives, such as natural gas, solar power, and wind power, which are all also cleaner long-term environmental solutions than petroleum.

The Ethanol Mandate and Politics

In the United States, the mandate to use ethanol as a gasoline additive tends to vary, depending on the political party in power. But ethanol is also an important fuel source in other nations. In Brazil, the world’s largest producer of sugar cane, sugar-based ethanol is an important biofuel used to power many automobiles.