Drilling for gasoline in Ohio

The oil companies now have some competition from the corn belt. Ethanol from corn is now cheaper than gasoline from oil.

Criticized for years for costing more to make and costing taxpayers in subsidies to farmers, ethanol fuel may actually be cheaper now than gasoline.
Ethanol, made from corn, now costs $44 a barrel, while oil is priced at more than $50 a barrel, according to a new study by Portland energy consultant Robert McCullough.

More ominous warnings about oil prices continued on Friday. Goldman Sachs of New York said prices could spike to $105 a barrel. McCullough doubts oil will get that expensive but said ethanol is looking cheaper by the day.

"This is the first time in history that ethanol is significantly less than gasoline," McCullough said.

As long as oil prices continue to float above $44 a barrel, a new U.S. industry is being created, he said.

"By the way, it’s already there," McCullough said.

Many cars are already equipped to run on up to 85% ethanol. The only problem is is that the industry isn’t equipped to distribute ethanol nationally.