Des Moines Register 11-14-06 Ethanol industry growth to slow, ISU experts say Prices are predicted to remain profitable, despite higher costs and construction delays. By JERRY PERKINS REGISTER FARM EDITOR Ames, Ia. - Look for a slowdown in the rapid expansion of the ethanol industry, Iowa State University economists cautioned Monday. Increased costs and delays in ethanol plant construction, transportation bottlenecks in moving ethanol to market, and rapidly rising corn prices all signal that the expansion of the ethanol industry might be cooling, the ISU economists said in a webcast that originated from the ISU campus. John Miranowski, an ISU economics professor, said that ethanol output has tripled since 2000 and that the industry should continue to make money. The price of crude oil - and the resulting price of gasoline - is expected to remain at levels that make ethanol production profitable, he said. Tax credits and other subsidies for ethanol are expected to continue to be offered, Miranowski said, and clean air regulations and requirements boosting the use of ethanol also should be on the table in the future. But, he said, rapid expansion in ethanol plant construction has led to higher costs. Transportation backups are affecting the shipment of ethanol to the major East and West Coast markets. Paul Gallagher, associate professor of economics, said higher corn prices, increases in processing costs and higher costs for plant equipment all will slow the rate of expansion in the industry. Higher corn prices this year and next will increase the cost of producing ethanol by 30 cents a gallon, Gallagher said. Corn prices represent 60 percent of the cost of production. Amani Elobeid, associate scientist at the Center for Agriculture and Rural Development at Iowa State, said a study she and others recently conducted showed that if unleaded gasoline costs $2.07 a gallon, the price of corn would have to hit $4.05 a bushel before the ethanol industry becomes unprofitable and investment dries up. Farm Editor Jerry Perkins can be reached at (515) 284-8456 or jperkins@dmreg.com