The ethanol producers long for the good old days, just a few months ago, when the price of gasoline was up to $4 a gallon and the economy was working well enough so that investors could pour money into the construction of ethanol production facilities.
But it seems that the bottom fell out within a very short period of time. The credit crunch has caused production plant construction projects to be put on hold or killed and the price of gasoline has plummeted making it more attractive than ethanol, which has become more expensive because of the rising cost of corn.
As a result, the Department of Agriculture has said that the use of ethanol has declined. According to the DOA, ethanol use is projected to be 300 million bushels lower in December despite the government’s mandate to blend ethanol with gasoline. The federal government requires billions of gallons of ethanol to be blended with gasoline each year and so do several states.