Analysis of the cost of producing ethanol
July 12, 2025
An analysis of the cost of producing ethanol, it comes as a conclusion that the cost varies with the cost of the feedstock used and the scale of production. Approximately 85 percent of ethanol production capacity in the United States relies on corn feedstock. The cost of producing ethanol from corn is estimated to be about $1.10 per gallon. Moreover, 3 ethanol production plants in operation, using corn as feedstock, in USA are presented as an example:
- Ethanol 2000 LLP, located near Bingham Lake, MN, opened in 1997, is a limited liability partnership that was formed by Southwest Minnesota Agrifuels Cooperative and Broin Enterprises, Inc. The $19 million ($17.5 million for plant, $1.5 million for start up costs) plant was originally designed to produce 11,500,000 gallons of ethanol per year using 4,259,259 bushels of corn. Twenty-eight new jobs were created, and the economic impact being generated was approximately $7.5 million.
- Dakota Ethanol, LLC, located near Wentworth, SD, began operation in 2001. The cost of the ethanol project was $40 million. Operating as a New Generation Cooperative with 900 members, they produce 47 million gallons of ethanol annually. The plant employees 35 people.
- Northern Lights Ethanol, LLC is located near Big Stone City, SD. It is jointly owned by Northern Growers Cooperative and Broin & Associates. Northern Growers Cooperative consists of 650 member shareholders. The equity drive raised 14.7 million of the $48 million cost of the project. NLE started production in 2002. The plant produces 45 million gallons of ethanol annually using 14.3 million bushels of corn. The plant employees 34 people.
It a common fact, that fuel ethanol is often compared to gasoline from petrol. A comparison like this, is known and expected. Latest research have proven that because a gallon of ethanol contains less energy than a gallon of gasoline, the production cost of ethanol must be multiplied by a factor of 1.5 to make an energy-cost comparison with gasoline. This means that if ethanol costs $1.10 per gallon to produce, then the effective cost per gallon to equal the energy contained in a gallon of gasoline is $1.65. In contrast, the current wholesale price of gasoline is about 90 cents per gallon.
Cars that run on gasoline and ethanol see 25 percent less mileage with ethanol. However, as written before, a gallon of ethanol costs approximately 17 percent less than that of a gallon of gasoline and as the market grows and matures, production optimization would further drive down ethanol costs.
Research currently underway takes advantage of ethanol’s characteristics in a fully optimized engine that could greatly reduce the energy deficit. Downsizing the engine, combined with cheaper mixed fuel from ethanol and gazoline (E85), would result in cost savings to the consumer, potentially making E85 more favorable than gasoline. On the plus side, ethanol has a higher octane rating than gasoline so it can improve performance.
Sources: http://www.ag.ndsu.nodak.edu/qbcc/sectors/ethanol%20plants1.htm,
http://www.valveinteractive.com/press/tag/ocean/
Actual users report only a modest decrease in mileage, typically between 0 and 10%. Apparently this is because it is in actual engines, rather than laboratories; e.g., other characteristics of ethanol, including higher octane, and cooler and smoother combustion.
Those actual reports are with standard engines.
COULD YOU PLEASE MAKE ANALYSIS THAT CATER FOR SMALL TO MEDIUM SCALE PRODUCER SO AS TO ALLOW FOR COMPETITION AND IMPROVRD INOVATION BECAUSE IT ALWAYS SEEMS THAT ETHANOL PRODUCTION FROM ALL FEEDSTOCKS IS A PRESERVE OF BIG ORGANISATIONS AND UNIVERSITY STUDY SHOW ME AN ANALYSIS OF A SMALLER PROPOTION THEN I WILL BE COMFORTABLE THE WORLD IS HEADED SOMEWERE GREENER