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The effect of ethanol on oil prices

lil dickie said: "If ethanol takes off then oil might have a problem. But in the end, ethanol production is much more likely to increase the cost of corn, etc. Can ethanol production really impact the price of oil?"

Airelon said: "That's what I figure. See, when you look at the numbers . . . no. It can't. In 2004 we kicked out 3.4 billion gallons of ethanol. What's that? It sounds like a lot. But we consume around 146 billion gallons of oil. So it's not even .02 percent of our need for oil. However, one has to consider [i]perception[/i]. If the mass public [i]perceives[/i] that it will, then it just might. What is it they say? [i]Buy the rumour, sell the fact[/i]. :)"

lil dickie said: "Agreed. I guess the argument should be separated. The real potential of ethanol versus the hype factor. Based on the "green-ness" alone and the idea of getting off the dependency of dictatorships/towelheads/mullahs/mujahadeen etc that oil brings with it should give ethanol a huge hype factor. Many people "want it to work". So the industry is defintely one to invest in for a few pops. Plus since they have such a small bit of the pie sales will rise sharply."