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All In Favor Of Ethanol Say...February 17, 2009You don't hear much about Ethanol in current news since fuel prices have dropped so low. When you do hear a report on Ethanol, it's usually regarding an Ethanol refinery shutting down or filing bankruptcy. So what's happening?  Ethanol refineries and production facilities were popping up all over the Midwest in the past decade. As fuel prices rose Ethanol began to look like the fuel of the future. During this boom Ethanol facilities were purchasing corn futures as high as $7.00 per bushel on the speculation that fuel prices are going to keep on rising. Suddenly, fuel prices begin to drop and keep on dropping. Month after month the prices dropped until settling in the below $2.00 range. Currently Corn Futures are trading at around $3.50/bushel.  This leaves the Ethanol plants sitting on massive amounts of liability in the form of corn futures that are worth half of what they paid for them a year ago. There is virtually no way most of these plants can survive being that far upside-down on investments. The question is what happens with the multi-million dollar facilities sitting idle? Can you guess who's purchasing the plants now? Big oil companies. Is it any coincidence? In my opinion Ethanol has a huge place in the future of America's fueling needs. Once the big oil companies situate themselves to maintain their hold on the biofuel market I'm guessing we'll see alot more Ethanol coming our way. Biodiesel too. My suggestion is to wait and watch closely. |
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