"Reviving the Economy"-Is Ethanol Out of Gas?

Not long ago, ethanol was considered the miracle cure for the nation`s energy problems. Companies were booming thanks to easy money and a government mandate to blend ethanol into the nation`s gasoline supply. But now many firms are scrambling just to stay in business. As we continue our look at “Reviving the Economy,” Dana Bate reports the ethanol industry appears to be running on empty.
DANA BATE, NIGHTLY BUSINESS REPORT CORRESPONDENT: These corn fields were once touted as the future to our energy independence. Companies sprung up around the country to produce corn-based ethanol, hoping it would fuel their bottom lines. But the industry has hit the skids. At least 10 producers have filed for bankruptcy this year. Plans to build new plants have been shelved. Sales of E-85 blends have dipped. Environmental policy expert Ken Green says the economics of ethanol have come home to roost.

KEN GREEN, RESIDENT SCHOLAR, AMERICAN ENTERPRISE INSTITUTE: At the end of the day, it`s only competitive with gasoline when gasoline is very expensive and gas doesn`t stay expensive for very long. And so once the economics of it really worked their way through the system and everybody went, wow, I`m not going to make any money off of this, that was part of the collapse.

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BATE: The future for the corn-based ethanol industry is murky. But having those firms in place now gives the industry a headstart toward developing ethanol from other plant sources. The question is whether scientists can develop that fuel on a commercial scale fast enough.

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