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Ethanol A Losing Proposition For Investors
By Mr Ethanol | November 21, 2007
International Herald Tribune:
Ethanol, the centerpiece of President George W. Bush’s plan to reduce U.S. dependence on oil, is the worst energy investment of 2007.
Ethanol, a corn-based fuel, tumbled 57 percent from last year’s record of $4.33 a gallon, or $1.14 a liter, and drove crop prices to a 10-year high. Production in the United States tripled after Morgan Stanley, the hedge fund firm D.E. Shaw and the venture capitalist Vinod Khosla helped finance a building boom for ethanol distilleries.
Even worse for investors and the Bush administration, energy experts contend ethanol is not reducing oil demand. Scientists at Cornell University say making the fuel uses more energy than it creates, while the National Research Council warns ethanol production threatens scarce water supplies.
Ethanol markets are so depressed that distilleries are shutting from Iowa to Germany. An investor who put $10 million into ethanol on Dec. 31 now has $7.5 million. Florida and Georgia have banned sales during the summer, when the fuel may evaporate and create smog.
“I don’t anticipate any sort of immediate rebound,” said Barry Frazier, president of Center Ethanol. “It’s going to take 12 to 24 months before the market is able to absorb the large amount of new capacity.” Read more.
Topics: Ethanol, Investing, Stock Market |
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