Saturday, June 24, 2006

Invest in ethanol?

I'm very dubious about investment in ethanol, and if your follow the ethanol business news, a number of other people and publications are as well. In the past, ethanol has been a boom-bust type of industry, and with prices high as they are right now, it is conceivable we could see another bust if, once the ethanol industry builds all of this vaunted capacity during high gas and ethanol prices, oil prices tumble. Another threat to investments in ethanol businesses is the viability of other alternative fuels. If there were a breakthrough in hydrogen fuel cells or if biobutanol takes off, ethanol investments would tank. If you are thinking about investing in the ethanol industry, you may want to play the game only in the short term, and keep a very close eye on the energy industries.

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