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Teen solves centuries-old math problem
WASHINGTON, March 7 (UPI) -- The high price of corn could erode profits from the booming ethanol industry, a new report says.
The Des Moines Register reported Wednesday that net operating returns for the industry will fall from 61 cents per gallon last year to 28 cents per gallon this year and 19 cents by 2012. It cited a report prepared for Congress by the University of Missouri's Food and Agricultural Policy Research Institute.
Pat Westhoff, the institute's program director, said because plants need to make 20 cents per gallon to cover the cost of capital, the rise in corn prices will prove a disincentive to build new plants in the long run.
"That slows investment dramatically," he said, according to the newspaper.
The report is based on the assumption that the price of oil will drop from $60 levels now to $50 a barrel by 2016; ethanol prices follow that of oil and gas. Critics of the study told the Register, however, that they expected the price of oil to be considerably higher in 2016.
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