Ethanol rush running out of gas
Alternative energy's latest craze is losing support on Wall Street.
By Grace Wong, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Ethanol producer Hawkeye Holdings postponed its initial public offering this week, the latest setback for makers of the alternative fuel and a sign more tough times may be ahead.

As crude prices spiked to record highs earlier this year, ethanol was cast into the spotlight. But now that oil prices are falling, ethanol producers are hurting. The front-month crude contract is trading near a six-month low at around $61 a barrel and is down nearly 21 percent from the record closing price set in July.

Shares of VeraSun (Charts), the No. 2 producer, have plummeted 26 percent since it went public in June. The stock price of Aventine Renewables (Charts), meanwhile, has slumped by half since it went public.

Ethanol IPOs generated plenty of buzz in the summer, when soaring oil and gas prices kept investors on edge, although some analysts warned about the dangers of getting in on the craze.

In addition to tumbling oil prices, ethanol producers have faced a sluggish market for companies going public. Of all the companies that have put their plans to go public on hold or withdrawn their offering altogether so far this year, about 73 percent have done so due to market conditions, according to deal tracker Dealogic.

For a look at what a wild ride ethanol makers have had this year, consider the stock of Pacific Ethanol (Charts), the company in which Microsoft (Charts) founder Bill Gates owns a stake.

Shares of the Fresno, Calif.-based company soared in early 2006, quadrupling in a value from the start of the year until they hit a peak of $44.50 in May. But the stock then plummeted all the way back to around $15, though at that price it's still up about 40 percent so far this year.

And as the fever for alternative energy cools, other IPOs in the sector could also have trouble getting out the door. Ethanol producer U.S. BioEnergy recently filed to raise up to $300 million and Clean Energy, a company that provides natural gas as an alternative fuel, also has filed to go public.


True or False: Ethanol's cheaper

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.