Enjoy low gasoline prices for a short while. Once ethanol producers
are all driven out of market, gasoline prices will soar to heights
unknown and prices here-to-fore unseen.
The second largest ethanol producer in the US, with 13% of total US
ethanol capacity, and a wholesale price of $0.83/gallon for ethanol,
Ethanol producer VeraSun Energy Corp. reports a third-quarter net
loss of about $464 million. Verasun is unable to report quarterly
loss because of "extraordinary and critical demands" of the
VeraSun filed for bankruptcy protection citing volatile corn prices
and bad bets on corn futures.
VeraSun estimated a quarterly loss of $63 million to $103 million.
VeraSun earned a profit of $7.8 million in the third quarter of 2007.
VeraSun expects to report a third-quarter gross loss of $206.7
million. VeraSun expects to report "a substantial operating loss" for
the quarter of as much as $637 million
The company expects third-quarter revenue of $1.08 billion, up from
$221.9 million during the year-ago period, on increased ethanol sales
at higher prices.
Once again farms and corn are blamed - no mention of foreign
terrorist oil, an inept congress - no mention of the bailouts for big
oil, banks, wall street, CEOs, autos, and insurance -
VeraSun, founded in 2001, went public in June 2006 amid perfect
market conditions. Corn was cheap, gas cost a bundle and refiners
were clamoring for more ethanol to use as a cleaner-burning
alternative to the additive MTBE. VeraSun locked into prices for its
feedstock for the third quarter, corn went into a sharp decline from
almost $8 per bushel to less than $5 per bushel in mid-August.
The company in mid-September tried to raise $20 million in a public
offering, but later scrapped that plan and retained Morgan Stanley to
help it evaluate "strategic alternatives" involving anything from a
buyout to a partial sale of assets.
Trading of the company's shares on the New York Stock Exchange was
suspended on Nov. 3.