I have nothing against ethanol, if it was not subsidized (per your prev. post - mainly through the oil companies). However, your information is interesting:
1. The farmers receive no direct subsidy “for ethanol” unless they’re part owners in an ethanol plant (and some farming co-ops are). The per-gallon blenders credit goes to the oil companies to put the stuff into your gasoline. Ethanol is merely another market buyer for their corn, along with feedlots, pig feeding operations, HFCS suppliers, etc. That’s it. The same field corn will go to any of these outfits.
2. As long as there is the correct differential between gasoline and corn prices, making corn into ethanol will be profitable. Want a free market where corn for ethanol becomes non-viable? Crater the price of gasoline while you keep the price of corn high. Ethanol disappears overnight.
#1 has to play into #2, right?
Correct.
The various economic studies on the matter reckon that if we eliminate the blenders’ credit on ethanol, that corn prices might go down, oh, $0.25/bu, perhaps as much as $0.40/bu, and gasoline prices might go up by $0.05 to $0.10/gal.
For farmers who are near the break-even, that quarter to half-buck means a great deal. For someone with a SUV, that $0.10 might not be as bad a back-breaker every week, but it will add up over a year. Nonetheless, it wouldn’t result in gas shooting to the moon, nor corn cratering. We could eliminate the blending credit *at these price levels* and it wouldn’t be the end of the world either way.