[RockinRight]

So what you mean is that once oil broke the $40 mark, sugar cane-to-ethanol became viable?

Or are you saying that using sugar cane to make alcohol will drive oil back down to $40?

[tcostell]

Well, ethanol from sugar cane is economically viable in many markets (Brazil for instance) at roughly $40 per barrel. It doesn't work in the US because it costs so much more to grow sugarcane in the US than Brazil (the entire market is provided artificial price supports in the form of government subsidies which make it much more expensive)

Saying it would drive oil back to that price assumes a lot about overall supply of both ethanol and crude that I don't think is true. Expansion of ethanol will certainly slow the rate of increase of crude, and if enough of it comes online, it might even lower the price, but I haven't looked at the numbers to say more than that.