Well, that didn’t take too long. Just when the President starts to promote ethanol as a way to curb America’s addiction to oil, industry analysts are already talking about being in an “ethanol bubble”, or so says Abnormal Returns and some of the analysts quoted there. One says that over-investment in ethanol distilling plants is likely, another warns that agribusiness giant ADM is saying some of its future earnings will come from ethanol, but that this profit – likely in the short term – is not guaranteed to last past the next decade. The high interest in and value of ethanol, especially corn-based ethanol, could raise the price of corn. Or there could be an abundance of corn and profits would sink (then again, so should gas prices). In any case, investors are being told the ethanol market is volatile, and that could affect us all.
[Source: Abnormal Returns, Image from the Washington Post]

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