Ethanol Stock: A Matter of Supply And Demand

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Ethanol which is also known as ethyl alcohol or grain alcohol is a colorless liquid that is also inflammable and has been known to mankind since ancient times when it was used for making alcohol beverages either as pure or in a denatured form as a solvent or in medicines as well as colognes. It has mainly been used as an agent for intoxication in fermented as well as distilled liquors.

However, ethanol that is blended with gasoline to make high-octane fuel is usually sold in areas close to where ethanol is produced and accounts for lower gas bills in these areas. But, since the cost of transporting ethanol is high, it has to be primarily used in the corn belt growing regions of America, where it saves users as many as 7 to 10 cents per gallon as compared with normal gasoline prices. Ethanol stocks are thus influenced a lot by supply and demand as well as by timing.

Major Players in Ethanol

At present, the producers in the forefront of manufacturing ethanol include Archer Midland, Green Plain Renewable Energy, Xethanol Corp., The Andersons Inc., Greenshift Corp as well as giants like VeraSun, Hawkeye and Aventine Renewable Energy. With better and latest technology being used for the production of ethanol it is expected that oil imports to the US would be reduced and a twenty percent growth in ethanol production will take place.

With a continuous rise in oil costs and with better innovations that facilitate better fermentation methods a great reduction in the cost of ethanol has come about and so the demand for it has increased and America is fast catching on to its advantageous use. The result is that there is plenty of hot money being attracted to keeping bigger ethanol stocks and many an ethanol producer is raking in big money from it. Ethanol stocks can be expected to reach mammoth proportions and with President Bush strongly supporting it, it may act as a further catalyst to ethanol stocks being constantly replenished.

Major players in the ethanol market and which have significant ethanol stocks include Archer Daniels Midland which is the leading ethanol producer and its close rival and second largest ethanol producer, VeraSun. Everything would have been rosy for ethanol stock keepers but for the declining oil prices that have had a negative bearing on ethanol stocks though there is reason for optimism that the ethanol stocks will attract greater demand as its popularity in the world is catching on.