Blog Post

Ethanol Glut Shutters Another Plant

Corn-based ethanol just can’t win. Even Biotown USA — a town renamed for biofuels a couple years ago — couldn’t make the economics of an ethanol plant built by VeraSun (VSE) work in this current market. Now another ethanol producer, BioFuel Energy Corp. (BIOF), has said it’s halting work on its third planned plant due to a production glut and dropping ethanol prices.

An ethanol surplus created by market subsidies combined with a lack of infrastructure for its delivery and use has pushed down the average price of ethanol some 30 percent since May. Add in the rising cost of corn, and some ethanol plants have been pushed to the brink of bankruptcy in recent months. It’s a dangerous time for ethanol investing.