Economics of the production of ethanol

Kremer, L.
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The cost of producing alcohol naturally varies with the raw material and with the process. In the case of corn alcohol, the raw material charge is the major cost item; therefore, instead of selecting one cost for alcohol from corn, a graph is presented showing estimated cost of producing alcohol vs. the price of corn. The graph is a straight line showing an alcohol cost of 27 to 30 cents per gallon with corn at 40 cents per bushel and an alcohol cost of 83 to 86 cents with corn at $2.00 per bushel. Molasses alcohol is made from a by-product of sugar refining which, if not sold, can be disposed of only at considerable expense. It is expected that molasses will sell at such a price that molasses alcohol will be coopetitive with synthetic alcohol, which is made from ethylene. Synthetic alcohol is estimated to cost 24 to 27 cents per gallon by the indirect hydration process and 16 to 20 cents per gallon by the direct hydration process. It is estimated that alcohol is produced from the one waste sulfite liquor plant in the United Stntes at a cost which lies between 24 and 28 cents per gallon. The American plant for making alcohol from wood waste has never been operated successfully; it is estimated that when operating difficulties are overcome the alcohol will cost about 26 cents per gallon. Alcohol fron agricultural waste is tentatively estimated at 22 cents per gallon on the basis of a preliminary economic evaluation. The cost of alcohol from the Fischer-Tropsch oxygenated by-products is part of a joint cost, hence that fraction of the total cost which is charged to alcohol is arbitrary. [...] A decision as to whether the subsidization of corn alcohol is or is not advisable lies beyond the scope of this report, since the decision involves the consideration of political as well as economic factors. The short run effect ot subsidizing the use of 100 million bushels of corn to produce alcohol would be to raise corn prices about 4 cents per bushel. The long run effect would vary depending on what additional steps were taken in the over-all farm price support program.

Alcohol, Waste products, Alcohol -- Industrial applications, Ethanol, Economics, Agricultural economics