Ethanol Industry Burning Through Equity

Another ethanol refiner hoisted a white flag this past week. Aventine Renewable Energy at Pekin filed for chapter 11 federal bankruptcy protection, and while it is not the first, nor the biggest, its financial challenges point to continued stress for an industry that had been on top of the world a year ago. Aventine joins VeraSun, the nation

Of course, the larger ethanol companies are not the only ones having difficulty. Many smaller one and two plant operations have also sought bankruptcy protection in the past year following the plummet in crude oil futures in the latter part of 2008. No, they were not all caught speculating on the long side of the crude oil market, but caught in a cost-price squeeze. With ethanol prices linked at the hip to unleaded gasoline, what goes up must come down and ethanol prices fell below cost of production. At least the cost of production that had been booked by the plant