Agricultural Economics Department

 

Title

Is Corn Ethanol Economically Viable in the Long-Run?

Document Type

Article

Date of this Version

Winter 2-11-2009

Comments

Published in Cornhusker Economics February 11, 2009. Published by Institute of Agriculture & Natural Resources, Department of Agricultural Economics; http://www.agecon.unl.edu/Cornhuskereconomics.html

Abstract

The corn ethanol industry is in the pits, with plants being idled and firms declaring bankruptcy. Not only that, but each month seems to bring a new study assailing corn ethanol because it doesn’t help the environment, or it doesn’t reduce dependence on foreign oil, or it drives up food prices, or it is harmful to health.

These assertions each have some basis, and they have gone far to undermine public policies in support of corn ethanol. So what then is the future for the industry? Can it survive without mandates and subsidies? To answer, we must first look at the cost structure.