Ethanol

The Parliamentary Library produced a great Current Issues Brief back in early 2003 about Ethanol as fuel. What I got out of it was that Ethanol wasn't cost effective: at that time, it cost double to produce Ethanol compared to Petrol (70c v 35c) and a given volume of fuel Ethanol only contains 68% of the energy of the equivalent amount of Petrol.

But that was then when oil cost less. What's the story now?

If I can understand the figures given in the ABARE report to AFFA, "Viability of Sugar Cane Based Fuel Ethanol" , which was one of the sources of the Issues Brief,

• it might actually cost as little is 55c/litre to produce ethanol
• it cost 35c/litre to produce gasoline when a barrel of oil cost U.S$32 per barrel and, looking at the figures, it seems that (at an Aus/U.S. exchange rate of 65c/$1) a litre of petrol costs 5-15c more in Australian dollars than a barrol of oil costs in U.S. dollars.

Thus if a barrel is U.S.$40, petrol costs 45-60c to produce.

Not being a Forgerini or Pickard, I won't show my working; but I think that will make ethanol's cost comparable when oil reaches U.S.$81 per barrel, taking the 68% efficiency into account.