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Ethanol & Other Alternative Fuels

Managerial Economics 2


Running Head: Managerial Economics – Ethanol and other Alternative Fuels in the United States

Overview

I have discovered that the high price of gas has intensified the search for alternative fuel

resources to help lessen our dependence on fossil fuels. Methods such as carpooling, mass

transit, and hybrid cars will not, by themselves, solve the problem. As the debate goes on for

ethanol and alternative fuels, I found that President Bush has backed federal funding for

continued research and Congress is calculating the best way to implement it.

One alternative that has received a great deal of attention is ethanol. There is some debate

about the efficiency of ethanol. One side feels the energy costs to produce ethanol outweigh the

benefits. These opponents state producing and running tractors, the production costs and even the

energy consumed by workers including food, transportation and police protection raise the costs.

The worker cost is not usually figured in comparisons like this. I also found that the naysayers

also didn't take into account the added value of ethanol byproducts, which can be used in cattle

feed. The analysis was based on the technology in use at the time, which included old processing

plants. There is reason to believe ethanol production will become more efficient, possibly at a

faster rate than the mature petroleum industry. The newest plants incorporate technology to

streamline the process and save energy and money.

"There are a lot of new technologies", said Hosein Shapouri, an agricultural economist for

the U.S. Department of Agriculture. "It's going to continue to improve the yield, and also lower

Managerial Economics 3

the energy."

Besides bushels of corn, researchers are looking for other energy efficient methods to

produce ethanol. They're researching sugar cane and switchgrass....