Production Cost of Ethanol and Gasoline

    I had previously suspected that for motor fuel the cost of ethanol production might be higher than that for gasoline. However, I have now made some calculations on production costs of both ethanol from cellulosic materials and gasoline from crude oil.
    This quick analysis shows that production cost of ethanol is about $1 per gallon versus more than $2 per gallon for gasoline. Calculations are below. The ethanol was presumed to be produced from $30 per ton corn Stover, which is leaves and stalks of corn left in the field after corn harvest. Gasoline was presumed to be produced from crude oil at $90 per barrel.
    The cost of the factory for ethanol production is significantly higher than the cost of a refinery for gasoline production, which is reflected in the charge for amortization. However, the cost of crude oil is much higher than the cost of corn stover.
    This says nothing about whether there is sufficient availability of corn stover to satisfy motor fuel needs, even if the factories were built.
    The analysis also says that everything possible should be done to bring down the cost of crude oil.

RAW MATERIALS
For Ethanol:
    C&E News (1/28/13) says 285,000 tons of corn stover are required to produce 25,000,000 gallons of ethanol. That's 87.7 gallons of ethanol per ton of biomass. Corn Stover is all of the cellulosic material (biomass), such as leaves and stalks, left in the field after corn harvesting.
    A paper by Purdue (http://www.extension.purdue.edu/extmedia/ID/ID-404.pdf) assumes 60 gallons of ethanol per ton of biomass.
    The cost of dry corn stover is $30 a ton. Therefore, the RM cost to produce ethanol from corn stover is $0.342 per gallon (285,000 x $30 / 25,000,000)
For Gasoline:
    Crude oil price is $90 per 42-gallon barrel. We will assume that 42 gallons of crude oil is converted to 42 gallons of various products including gasoline, each of which has a different value. However, we will also assume that the average crude oil value for conversion to a gallon of gasoline is $2.143 per gallon ($90 / 42).

RM SHIPPING
For Ethanol:
    C&E News says the corn stover harvest area to produce 25,000,000 gallons of ethanol is 445 mi ². The radius for that circle is about 12 miles, with an average transport distance of half that. The Purdue paper indicates a transportation cost of $8 per ton, which would be $0.091 per gallon of ethanol (8 / 87.7).
For Gasoline:
    The average shipping price the imported petroleum is about $2 per barrel or $0.048 per gallon (2 / 42).

FACTORY AMORTIZATION
For Ethanol:    KiOR has projected a plant costing $222 million to produce 13,000,000 gallons per year of biocrude. The product is not chemically defined. It's probably better to take the figure of $10 per gallon of ethanol, from a Poet/DSM joint venture. Amortizing the plant costs over 20 years, gives an annual amortization cost of $0.50 per gallon.
For Gasoline:
    No new oil refineries at been built in the US for many years. However, a tribal cooperative in North Dakota is projecting a 20,000 barrel per day refinery at a cost of $400 million. A petroleum barrel is 42 gallons. If the plant operates at 85% efficiency for 365 days/year, annual production of refined products will be the equivalent of 261 million gallons of gasoline (20,000 x.85 x 365 x 42). Amortization over 20 years is $0.077 per gallon of gasoline equivalent ($400 million / 261,000,000 gallons / 20 years).
    A BP refinery expansion in Indiana has recently been announced at $4 billion to increase refinery production by 270,000 barrels per day. Amortization over 20 years is $0.057 per gallon of gasoline equivalent.

TOTALS

Item	Ethanol ($/gallon)	Gasoline ($/gallon)
Raw material	0.342	2.143
RM shipping	0.091	0.048
Factory amortization	0.500	0.077
Total	0.933	2.248