Tuesday, November 11, 2008

Pacific Ethanol Hurting

New quarter, same story for Pacific Ethanol. We noted a few months ago that the high price of corn was hurting the company's margins and now the official numbers are in: a $55 million quarterly loss and a closing share price of less than $1. Ouch.

The company cites the high price of corn as the primary driver, but other problems persist as well, such as the falling price of fuel in general and ethanol in particular-- down to $1.80/gallon from $2.45/gallon earlier in the third quarter, debt, and non-cash write-downs on failed investments.

The company is pinning its hopes on a increased federal ethanol mandate that takes effect in 2010 and on the expected green-energy-largesse of an Obama administration. All of this, of course, continues to mask the basic fact that ethanol is a boondoggle that simply is not economically viable on its own.