mogapetto

The Profitability of Ethanol Production

I am not sure where an dhow you are coming up with natural gas cost of 1cent cost/gallon of ethanol. By all estimates, it takes 35000 BTU of heat to produce 1 gal og ethanol. At a cost of $8.20/mill BTU, this equates to 28.77 c/gal of ethanol. Similarly, it takes about 1kwh of electric power to produce a gal of the stuff and at $0.05/kwh, it is 5c/gal, making the total energy cost close to 34c/gal as against your 8c!! Also, where have you taken the enzme and other chemical costs into account? All that is another 15c/gal. Now do the math and you see the COGS is (1.56-8+34+15=1.96) and the contribution margin is 24c, less than 10%!! Not a great biz model to be crazy about!!