“The price for ethanol has fallen 30 percent since May,” reports Greenwire, “drying up investment and creating a perilous situation for those who invested big in the alternative fuel. Grand plans for ethanol plants across the Midwest are being delayed while the investment for new facilities dries up.”

For years, the rack (wholesale) price of ethanol was higher than gasoline, even during the aftermath of the Katrina-Rita double whammy on U.S. petroleum infrastructure.

Ethanol producers are caught between rising production costs and falling sale prices. Both stem from the ethanol mandate and various producer subsidies. Government policies (a) increased the demand for and price of corn, driving up producers’ costs, and (b) increased ethanol supply, causing a glut and falling ethanol prices.

Greenwire comments that, “Analysts remain undecided whether the downturn is a slump or the end of a fad.”