What are the main factors of ethanol prices?

Ethanol prices can be influenced by a number of different factors. This fuel depends on the agricultural product, usually corn or sugar, so the cost of these basic commodities can have a huge difference in terms of costing fuel costs. Other factors affecting the price of ethanol include production costs, transport costs, taxes or tariffs and subsidies. Some of them create pressures on ascending prices, while others are working to reduce prices. Increasing conditions such as disease, weather and soil conditions have a significant impact on the price. The Offer and Inquiry Act teaches that if the demand remains the same or increases and the supply is shrinking, the costs are rising. Therefore, when the conditions reduce the yields of the crop, the price rises. Ethanol prices may actually fall during better years.

These basic building blocks of ethanol are important, they are not as volatile as many think. Corn and sugar are often bought on the basis of a contract, avoiding some daily changes in prices to which it is certainly.Ethanol prices may therefore remain relatively stable, although there are wide swings on the commodity market. When new contracts are agreed, ethanol prices may change due to updated commodities.

Another main factor in determining ethanol prices is transport costs. Ethanol must be transported in tanks on trains and trucks because it is so corrosive. There are very little pipes that are designed to carry such material. Ethanol therefore has its own cost increase compared to conventional petrol and oil.

transport costs are somewhat compensated by the fact that there are subsidies in many places and the tax breaks on the place for ethanol. Such incentives exist because some governments want to support the use of ethanol as a cleaner fuel. This helps to push ethanol prices, albeit artificially.

However, this artificial price control can work in both ways. TariFY and other taxes from ethanol are also artificial prices and help push the price up, especially in terms of foreign sources of ethanol. For example, Brazilian ethanol would be much cheaper in the United States, except that its import is a tariff. As a result, the Brazilian Ethanol Award on PAR or even more expensive than domestic ethanol. This may not be beneficial for consumers, but helps protect the domestic industry.