Can Biofuels Bottom?

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It is unfortunate that corn and soy and oil palm-derived biofuels became the face of this technology. When we can move to cellulosic sources many of the drawbacks will be removed. It is just a matter of time until high oil prices return so we shouldn't stop investing in alternatives as we did after the energy crisis of the 1970s. As has been said, "they didn't end the stone age because they ran out of stones."

Steve of CA 12:38PM March 09, 2009

Biofuel as a stand alone product is not viable. Industry leaders are trying to exclude the growers and end users of the biproducts from thier profit analysis. Profit studies have to include all facets of the industry to show the true value of biofuels. When I first studied biofuels as an alternative to fossil fuels,I found that it was unsustainable without the complete use of the biomass . When any product is emerging onto the market , it is wise to make the product available to the potential customers at a cost which will make them want to change from the product they are presently using. The companies to date think that just because they are green they dont have to follow common rules of merchandizing. The rule is hook the people which arent in your chior and then you can make a profit. This is why it usually take four to five years to start a successful company. This isalso why many companies fail. Most of the companies are under capitalized and the administrators think they should be paid outrageous salaries. This short sited philophy is the reason many companies are failing at this time. Letting the company grow and earning a good living over a long period has been usurped by the I want it now club.

Richard Becker of OR 12:10AM March 09, 2009

How comfortable are you investing in an industry which, after 30 plus years of subsidies, mandated production and tariffs still can't pull its own weight? And lets not even get into the massive environmental issues caused by biofuels.

Freeranger of IA 5:41PM March 08, 2009

"... and conditions for ethanol producers IMPROVE."

Subsidy Eye 2:40AM March 07, 2009

Mr. Shinkle, you write that "Merrill estimates crude [oil] needs to head back above $60 a barrel from around $45 today for most refiners [of ethanol] to break even without help from government subsidies." What do you mean "even without help from government subsidies"? The United States is not Canada: unlike in that country, none of the federal or state subsidies propping up the ethanol industry disappear once the oil price rises high enough to make ethanol competitive without them. In the United States, ethanol subsidies are the gift that keeps on giving!
And say your predictions are true, and conditions for ethanol producers rise, what will then happen? Well, for one, the mothballed plants will re-open, and corn prices will firm, eating once again into the profits of the ethanol producers until the marginal producer is just breaking even WITH the subsidies. Meanwhile, of course, the industry will continue to push Congress for more financial assistance and to force automobile manufacturers to warrant higher ethanol blends than E10.
To analyze this industry as if it is driven by normal market, as opposed to politically driven, forces is naive.

Subsidy Eye 2:34AM March 07, 2009