The Problem With The Ethanol Industry

Despite this huge increase in mandated ethanol, it has never been enough to bring continuous prosperity to the ethanol industry, or to the corn farmers that supply it. In my previous article, I showed that major ethanol producers have seen their share prices hit hard over the past two years.

I contend that with the current system in place, the ethanol industry will constantly struggle for regular profitability. The ethanol industry will be continuously at the mercy of the political climate.

The Opposite of a Free Market

Last year, Iowa Senator Chuck Grassley penned an editorial arguing the merits of the nation’s RFS program. Senator Grassley stated in part:

As a free-market conservative, I believe that competition spurs innovation, encourages dialogue and ultimately delivers the best quality products to consumers. That’s one of the many reasons I believe so strongly in ethanol as part of an all-of-the-above energy strategy.”

Forcing consumers to use your product is the opposite of the free-market conservatism Senator Grassley says he supports.

But it doesn’t have to be that way. There is another path.

I will describe that solution in the next column. 

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