New West Energy Grok

Wall St. Pops BioFuel’s Bubble

By Richard Martin, 6-15-07

Way back in Nov. 2006 I wrote about the possibility that the financial side of the renewable-energy business – venture funding, private-equity investments, and so on – was showing bubble-icious signs. The founders of Denver-based BioFuel Energy found out yesterday how warily Wall St. views cleantech startups: after cutting its offering price twice in the run-up to its IPO, Biofuel opened at $10.50 and closed at … $10.51.

Founded last year to build ethanol production plants across the Midwest and the Rockies, BioFuel gathered around $140 million in venture funding and scored a long-term contract with Cargill, the agribusiness giant, for supplies of corn and for marketing channels to sell ethanol from its plants to utilities. Two BE plants are under production, in Wood River, Neb., and Fairmont, Minn., and the company plans three more – blueprints that may be shredded by Thursday’s thud on the Nasdaq.

The weak market for BioFuel Energy shares could put a damper on other Rocky Mountain green-energy companies looking to raise public money in the next couple of years – particularly since experts are already talking about a short-term ethanol glut, according to Investor’s Business Daily, because of the lack of power plants to burn the stuff.

In other energy news:

-- In the bad old days before the 2006 election, the Republican-controlled Congress passed (and George W. Bush signed) the Energy Policy Act of 2005, which will go down alongside the Dred Scott decision as one of the most misguided U.S. government edicts ever. The bill called for broad subsidies to Big Oil – particularly large oil companies based in Texas. Last week a bill to alter the 2005 act to adjust timelines for the development of potential shale oil resources emerged from the House Resources Committee.

-- Continuing its backward-looking efforts to pretend that neither global warming nor globalization threatens its future, the always reliable U.S. auto industry “launched an effort Wednesday to convince drivers that their prized SUVs are at stake in the congressional battle over fuel-economy standards,” the Post reports. Polar ice caps or profits for GM? You decide!

-- Invent a better lightbulb, and the U.S. Senate will beat a path to your door and hand you a fat check – at least that’s the premise of the “Bright Tomorrow Lighting Prizes,” part of a bill to create incentives to “meet the nation’s growing energy challenge.” …Gee, that’s funny: when the goal was putting a man on the moon, as opposed to preserving the planet we already live on, didn’t the government create a whole federal agency and invest billions of dollars instead of offering a bounty?

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