Corn ethanol profitability scenarios

Has reality pricked corn ethanol's bubble? Michael Roberts at Greed, Green and Grains doesn't think so:

I'm not a big fan of ethanol policy. But don't count out ethanol when oil is trading at $75 and corn and natural gas (which is key for fertilizer prices) remain cheap. If world demand recovers as markets are now speculating, we'll be seeing more ethanol, even without additional government mandates.

This is true, but even if there is a wide gap between cost of production and price, where that rent is captured in the value chain matters. If ethanol is the marginal use of corn, and corn is priced at its fuel value (as it was for most of 2008), producing additional ethanol isn't very attractive because margins are effectively breakeven (and certainly not enough to remunerate investments in new supply capacity).