Up until crude oil hit $90 per barrel, ethanol had seen some hard times, trading down to around $1.50 per gallon, which is near or below the break-even point for producers.
The issue has largely been one of over supply. The U.S. government has mandated very aggressive goals for ethanol production, including a subsidy of more than 51¢ per gallon to fuel producers who mix ethanol with gasoline. And producers responded strongly, there are projections that 2012 production goals will be met in 2008; but that over supply has hit producers where it hurts: in the profit margin. For example, On Monday, the Denver Post reported that Denver based Bio Fuel Energy Corp. has delayed plans to build more ethanol plants until prices come up.
