Abstract: The Development and Demise of the Agrifuels Ethanol Plant, 1978-1988: A Case Study in Business Development and Energy Policy

Jason P. Theriot


In the 1970s, as the nation grappled with the economic rollercoaster created by the energy crisis, it became clear to Americans that an abundant, cheap supply of petroleum no longer existed. Jimmy Carter entered the White House in 1977 with a country swirling in economic disarray. One of his solutions to America's growing energy crisis was the creation of a domestic alcohol fuels industry—a massive, federally backed crash program to produce ethanol from crops, thereby reducing the nation's dependence on foreign oil imports. The Agrifuels Ethanol Plant in New Iberia, Louisiana, became one of several firms across the country that evolved from this era of government subsidies and uncertainties. This case study on the Agrifuels Refining Corporation serves as a lens through which to view change in domestic energy policy from 1978 to 1988 and its impact on the emerging ethanol industry and business strategy. It examines the inherent ineptitude of crash programs and the apparent inability of our political system to negotiate successfully through shifts and cycles in economic conditions. In the end, the collision of the divergent political philosophies of Carter and Reagan, coupled with a debilitating economic recession and the shocking collapse of oil prices beginning in the early 1980s, resulted in ethanol's demise, leaving the rusted remains of dozens of foreclosed ethanol refineries scattered across the nation's landscape.