Assuming corn prices are at $2 a bushel, the cost of producing a gallon of ethanol is roughly $1.20. However, because ethanol does not produce as much energy as petroleum, that is equivalent to almost $2 a gallon, or $50 to $60 per gallon of oil. Without an ethanol subsidy (which ended on Dec. 31), oil prices would have to be between $50 and $60 dollars a barrel for ethanol to be cost-competitive with petroleum based fuel sources.
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