Ethanol has ups, downs

By Jack H. Knowlan Sr.

Ethanol has been around for a long time and has had many ups and downs.

In 1860 German inventor Nicholas Otto invented the first internal combustion engine powered with ethanol.

In 1896 Henry Ford built his first Quadracycle to run on ethanol. In 1908 he manufactured a flexible Model T Ford to run on ethanol or gasoline.

In 1917 the World War I shortage of gasoline drove ethanol usage up to 50 million to 60 million gallons.

In 1942 during World War II a crude oil shortage caused a temporary increase in ethanol.

In 1973 the Arab oil embargo resulted in a gasoline crisis, long lines at the pump and 1974 legislation to promote cellulose fuel, which failed to produce any ethanol.

In 1978 action to decrease the lead level in gasoline brought about the Energy Tax Act, which promoted gasohol (10 percent ethanol) with a 40-cent-a-gallon subsidy to the producer and a 4-cent excise tax on the product.

In 1980 the Energy Security Act offered a $1 million loan to construct small ethanol plants.

In 1983 the Surface Transportation Act raised the ethanol subsidy to 50 cents a gallon, and plants peaked at 163 plants.

In 1984 the Tax Reform Act increased the ethanol subsidy to 60 cents a gallon, but crude oil prices dropped so low that even with the 60-cent subsidy only 74 of the 163 plants survived.

In 1995 the high $5-a-bushel corn prompted some states to give additional subsidies to keep plants solvent.

In 1998 ethanol subsidies extended through 2007 but reduced to 51 cents a gallon in 2005.

In 2006 more than 5 billion gallons of ethanol were produced from more than 2 billion bushels of corn.

The 2007 estimate is about 7.5 billion gallons of ethanol from about 3 billion bushels of corn.

The 2008 possible production could be 11 billion gallons from 4.4 billion bushels of corn.

The 2008 production estimate will be questionable for the following reason: Soybeans and wheat compete directly with corn for acreage in much of the Midwest. Soybeans require much less fertilizer than corn. Both soybeans and wheat prices are extremely high, and soybeans following wheat (double crop) would probably be more profitable than corn, thus reducing the corn acres.

Sixty bushels of soybeans at $10 a bushel could be more profitable than 150 bushels of corn at $5 a bushel.

If the hundreds of ethanol plants get greedy and gobble up more than their share of corn -- causing a severe shortage of milk, eggs and meat -- the president might wake up and remove the subsidies that keep the farmers in business. That more than likely would result in a low survival rate.

Limited ethanol production will undoubtedly continue until we find ways to reduce our fuel requirements and negotiate a more reliable source of supply.

It is ludicrous for us to assume ethanol can solve or even alleviate our dependence on fossil fuels. The worldwide crude oil supply and demand are so humongous and complicated that, even if ethanol gobbled up our entire corn crop and caused a food famine in the U.S., it would only be a drop in the bucket for our fuel-additive consumption.

Jack H. Knowlan Sr. of Jackson has an extensive agriculture background.