Ethanol to Stop Gas Hikes?

Ethanol, the fuel of the future? That's what some are calling the new form of fuel that is made primarily from corn, but also can be generated from other sources. Even though still in an infant stage, the production of ethanol will more than double from 2006-2020 thanks to a bill signed recently by President Bush.

Will this really help to ease gasoline prices though? Perhaps in the future it might, but two things need to happen to aid that. 1) There needs to be more information and accessibility to this alternate type of fuel. I know I haven't seen a gas station with a sign for "Ethanol" up around this area. 2) To use this ethanol based fuel, a a consumer must have what is called a 'flex fuel' automobile. Once those cars become more prevalent, stations might be more apt to market the ethanol fuel.

I pose this though, in the short term, will this new fuel truly help to lower gasoline price? As Dr. D has noted, adjusted for inflation, gas is now lower than it was in I believe the 70's. So surely, scarcity of resources alone can not explain the fluctuation of gasoline because if oil were becoming that scarce then simple economic theory would suggest the price of gasoline to be higher now because over time we have depleted more of the resource. So many other factors play into the cost of gasoline, i.e. transportation costs (it's nearly $9/gal in Sweden), terrorist threats and even impending weather threats along the costlines.