Do I pay $2 per gallon for ethanol but $10 for a box of corn flakes?

I personally believe that creating "cheap" fuel from food ( corn or sugar or whatever ) just shifts the cost burden elsewhere. As demand for ethanol increases so will the demand for corn. That will directly impact the price that food companies pay for corn. It will also increase the cost that farmers pay for feed ( for cows and chickens ).

The MicroFueler will use sugar as its main fuel source, or feedstock, along with a specially packaged time-release yeast the company has developed. Depending on the cost of sugar, plus water and electricity, the company says it could cost as little as a dollar a gallon to make ethanol.

(Via -Home Brew for the Car, Not the Beer Cup - New York Times.)