ethanol investments

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Ethanol Investments

The ethanol market is growing rapidly as alternative fuels and clean energy are becoming more and more popular. Business empires are pinning their hopes on the vast potential of making millions of dollars by investing in ethanol production. Investors must use discretionary caution as they go ahead with business plans and not experience the fate of the dotcom bubble burst in 2000. Ethanol investments are considered the best business opportunity, although the industry could face stiff competition from Brazilian sugarcane ethanol imports and the cellulosic ethanol industry in the future.

Ethanol investment is essential for the growth of the ethanol industry, which will secure America’s energy dependence and not make us dependent on foreign oil. Government initiatives and rebates make ethanol a very promising investment for the energy industry that has enormous growth potential. Investors must consider raw material supply, cost of manufacturing, competitive market, and long-term goals prior to making an investment, and not invest because of its sudden surge in potential growth.

Ethanol investment must take into consideration several factors, some of which are listed below:
  • Supply
  • Government support
  • Competition from gasoline industry
  • Imports from Brazil
  • Supply of corn
  • Cellulosic ethanol
  • Oil prices

America has a capacity of producing 4.7 billion gallons of ethanol annually. It is projected that by 2012, ethanol consumption will rise to 7.5 billion gallons per year. If the country’s corn ethanol production exceeds 7.5 billion gallons in 2012, prices could drop drastically. Although the promise of domestic energy independence from ethanol is attractive, to achieve long-term profits it must be able to compete with the gasoline prices. Corn is in short supply because of ethanol. Corn prices are dependent on weather patterns, and an increase in corn prices could result in decreased ethanol production and higher costs. These are some factors to be considered while making ethanol investments.