Ethanol Going From Panacea to Pariah - WSJ

In the span of just one year, ethanol has "gone from panacea to pariah" in the eyes of many investors, the Wall Street Journal reports. Critics blame ethanol for high corn prices, and question whether it really reduces the need for oil and helps the environment. A recent study by the Organization for Economic Cooperation and Development said biofuels, "offer a cure [for oil dependence] that is worse than the disease." Another organization said ethanol bolstered corn-growing could strain water supplies, while the American Lung Association said it's concerned about the biofuel's contribution to air pollution. While ethanol producers such as VeraSun Energy (VSE) and Pacific Ethanol (PEIX) continue to lobby Congress to boost the amount of ethanol refiners are required to mix into gasoline, "what once looked like a slam-dunk" is now far from a given, the Journal says. Other factors driving the share prices of ethanol stocks down include over-production, slipping prices, growing capacity and increasingly angry farmers and food-producers. "Our love affair with ethanol has finally ended because we've taken off the makeup and realized that, lo and behold, it's actually a fuel," Friedman, Billings, Ramsey analyst Kevin Book said recently. The WSJ article follows an earlier Bloomberg report (see summary) raising similar concerns about ethanol demand and supply.

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

Comments

[Chi Town Art]

People are finally waking up! Whose bright idea was it anyway that we should stop burning fossil fuel and burn our food instead?

[Tom C inAnacortes,WA]

Not true....people have not waked up yet! If they were awake they would know that ethanol produced from food sources such as corn is only temporary. Ethanol produced from cellulos will be the primary replacement for the majority of fossil fuels or the next 20 or 30 years until hydrogen and electric vehicles are produced and available in quantities to completely replace it. Construction of cellulosic ethanol plants in the U.S. will be ongoing in 2008. Japan already has one and China is contructing one now. All from cellulos.

[ADM Victim]

STOP the generous U.S. subsidies for Ethanol. Taking food away from the hungry is a "crime against humanity." Stop ADM now! We can't stop high oil prices But we CAN stop this Ethanol SCAM. All food is dependant on us doing it before it's TOO LATE!