Wall St abandons 'renewable' energy as oil prices fall
Renewable industry is the industry of the future, and always will be, as long as oil prices keep falling.
Remember way back last year, when "renewable energy" was the next big thing for investors? When Citigroup and other Wall Street firms were touting ethanol distillers on the Great Plains, along with wind, water and battery power? When fears the world had reached "peak oil" were about to send petroleum prices to unlimited permanent highs, and fuel-burners were screaming for biomassy alternatives?
With oil prices fallen even faster than grain prices, Goldman Sachs analyst Arjun N. Murti today dropped coverage of South Dakota-based VeraSun Energy of Brookings, S.Dak., Aventine Renewable Energy of Pekin, Ill., and Pacific Ethanol of Sacramento. This follows VeraSun's Chapter 11 bankruptcy filing on Halloween, "while Aventine and Pacific Ethanol have traded to very low market capitalizations" well below $100 million, Murti wrote.
Murti urged investors to sell Aventine and Pacific sales "based on replacement cost value analysis" -- which is to say, fossil fuel is again cheaper than distilled grain. He added that ethanol "will remain under pressure through 2009, as pricing suffers from an oversupplied gasoline market and weaker crude oil markets," and bankers -- no fools -- refuse to finance more grain-to-fuel plants in a glutted market.
Can a rebound in SUV sales be far behind?