Wednesday, January 24, 2007

Is Ethanol An Answer?

Well, the President says we can reduce the use of oil by developing alternate fuels, and Ethanol is one that is talked of. I've been told that transportation is a problem with this fuel source. It cannot be sent through pipes, like oil, but must be trucked to it's destination. The actual end cost of a gallon of Ethanol will be more than a gallon of unleaded gas.

Much of the cost can be attributed to the law of supply and demand. The cost of corn will go up as the demand rises. Right now, corn is primarily a food product in the US. With the use of corn/corn by-products as an alternate fuel source, the demand will rise, and so will the cost.

I've heard of a potential rebellion from the low income worker's who have corn (tortillas) as a staple in their diets. The cost of tortillas in Mexico is up 33% in the last week. For a laborer in Mexico, who makes $4.00 a day, the cost of a $3.00 tortilla will force more across the border to the U.S. If you think popcorn at the theater costs a lot now, wait for it to peak as more and more corn and corn products go into the development of Ethanol!

No comments: