Drunk On Ethanol

Producers are riding a boom, but the market may be as tricky as oil

Provide news feedback or report an error

May 15, 2006 at 4:00 AM UTC

This article is for subscribers only.

Andersons Inc. (ANDE ) used to manage grain silos, lease rail cars, and run a few home stores from its rural Ohio headquarters. Now it's an ethanol play. In the past year it has invested $36 million for minority stakes in three plants that will produce the fuel, which can be made from a variety of plant materials including corn, Andersons' speciality. Its share price has shot up from 30 to 122 during that time, adding more than $700 million to the company's market value.

Welcome to the ethanol boom, the closest America's farmers may get to an investment bubble. Since the pro-ethanol State of the Union address in January, shares of Fresno-based Pacific Ethanol Inc. (PEIX ) have doubled, to 37. Green Plains Renewable Energy has risen 40%, to 46, since it began trading in March.