Thursday, November 27, 2008

Conspiracy Theory 2..

I couldn't make this stuff up if I tried. Now I know why gas is $1.60 a gallon. When gas was $4.25, there was a rush to get a bunch of ethanol plants on line as quick as possible. Quick decisions were made, investments secured and construction began at a record pace. We all thought we were on the right track and the proverb "Necessity is the mother of invention" was holding true. We had confidence in the system that it would take care of itself. This scared the big oil companies shitless and something had to be done. The only answer was to make gas so cheap that there is next to no need for ethanol. Couple that with the credit crunch and banks are hesitant to lend money to ethanol plant construction.

All the big oil companies have to do is keep gasoline prices low long enough for the banks to call their loans on the ethanol plants. The plants go bankrupt and hence produce no ethanol, or at least the whole system is slowed down. Farmers that were growing more corn to feed the ethanol plants, now will have to second-guess their future planting. So I would guess that it would take a year of $4 a gallon gas to get hte ball rolling again. And that is provided the economy is back on track.

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