Last week I promised this post. After further thought, I'm still skeptical, but I will give the ethanol industry a couple of pieces of unsolicited advice, anyway.
1. Get off the government teat. Industries that are subsidized by the government tend to be very slow to react to trends. The ethanol industry is vulnerable to low oil/gas prices, and should have a healthy dose of fear that oil prices may one day crash. That fear should be turned into innovation to make ethanol more cheaply and efficiently. It isn't likely to happen with those subsidies and tariff protections in place.
2. Don't hang your hat on ethanol's environmental benefits. Ethanol's environmental benefits over gasoline are dubious and tough to measure. It won't be long before the environmentalists figure out that ethanol's net impact on the environment are about equal to gasoline. When that day comes, ethanol will become the same bastard child that oil is today.
3. Diversify the raw materials. If the price of oil remains the same and we see a drought similar to that of 1988, the ethanol industry is going to be in a serious bind. An over investment in corn based ethanol is just asking for trouble.
4. Use coal. If you throw off the yoke of environmentalism, then get on the coal train. The supply of coal will be steady and less price volatile than natural gas, which has become the energy du jour of the United States over the past ten years.
5. Be prepared for the next miracle fuel. It'll probably be biobutanol, which BP is dumping money into developing right now. It can be great to be the underdog (against "big oil") until somebody else takes the underdog role away from you. Ironically, it could be big oil that steals the role back.
There you go, ethanol industry. Even with these five tips, I'm still not sure you'll be around long, but if you follow my tips, you might have a better shot. Maybe.
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