More on ethanol from the Freakonomics blog. Bottom line if you read the Technology Review article: if oil is $100/barrel, your government's mandate to produce ethanol will cost you 42 cents per gallon of ethanol. But if oil prices fall to $40/barrel the cost to you rises to a whopping dollar a gallon.
Why? Well one way to get a handle on this is to ask what corn is grown for in this country. The Technology Review article reports that current ethanol mandates will require that about 45% of all corn acreage go to fuel, not food by 2015. Think about the consquences of that! (Or of already using 22% of corn acreage for ethanol.)
(The underlying study on all of this is by Wallace Tyner, an agricultural economist at Purdue University.)
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