The oil is pretty cheap to extract. According to
http://www.eia.doe.gov/neic/press/press87.html
oil costs about $4.50 to extract a barrel of crude
oil (a barrel has 19 gallons of gasoline and some
other useful stuff like propane and diesel). There
is plenty of oil other places in the world that costs
more than $4.50 a barrel to extract but from places
like russia, saudi arabia, nigeria and venezuela it
is $4.50. They also add that it costs $4.30 to add
a barrel of oil to world wide reserves through
exploration and development (I assume that means
finding the wells and installing the extraction
equipment and such.) I imagine these numbers don't
include the other costs of oil extraction like pollution
and such.

An acre of land produces 170 bushels of corn and
you can extract 2.5 gallons of ethanol from each bushel
of corn; a rough 425 gallons of ethanol per acre of
land.

If you throw out the propane and diesel fuel you can
get from a barrel of crude oil and only produce gasoline
it takes about 22 barrels of crude oil to get the same
volume of gasoline as you get in ethanol from an acre
of corn at a cost of roughly $220 in crude oil extraction.


This ignores that a gallon of ethanol has much less
energy than gasoline per volume and that crude oil has
other good stuff in it too like propane and diesel oil
and such.

Can you farm an acre of land for $220? A bit of googling
shows that it seems to cost anywhere from $190 to $350 per
acre (depending on weather and if land costs are included).

Far more people in this country grow corn than should
grow corn; it is highly subsidized by the government and
much of it gets thrown away, fed to animals that could eat
less expensive stuff, or turned into high fructose corn
syrup to make americans strong and healthy.

The same land could be used to grow low input intensive
crops that produce lots of oils for biodiesel; lower per
acre cost and far lower refining costs. But it isn't corn.
chris