VERA SUN ENERGY Corp. (NYSE:VSE) produces ethanol from corn, in Nebraska and Ohio. They’re taking advantage of the “Energy Independence and security act” that would allow the United States to reduce their dependence on foreign oil. The USA also want to develop the energy diversity. On top of this, ethanol does not produce CO2 emissions. We consider that emissions are compensated by the sequestration when the corn grows.
On the other hand, University of Minnesota studies showed that ethanol production monopolizes 20% of US corn crop. Thus, the corn prices have doubled. In addition to that, eating corn that we grow creates less greenhouse gas emissions than burning them in engines.
For all these reasons, biofuels appear as a short term solution for the environment, and for investors. Oil, biofuels and food prices are linked. Vera Sun stock fell 35% since early January, following Monsanto (NYSE: MON) and Pacific Ethanol (NASDAQ: PEIX). Short-term opportunities exist, but it appears dangerous to bet on biofuels, especially if the recession endures, and the oil price continues to fall.
Full story: http://www.hotstocked.com/article/0409/ethanol-and-verasun-energy-corp.html
