16 Replies to “Verasun Energy”

  1. The company made a big deal about Bill Gates investing in this. Does not look like another MicroSoft.

  4. I wonder how Brazil managed to build a successful ethanol industry? Is it because they have a better source of raw matrials? It looks like corn isn’t going to do the job.

  5. dp, I think it has something to do with a “manual” labor force. Think about it for a moment. Any logical person would come to the conclusion that bio fuel has the worst cost/benefit ratio of anything out there on the market right now.

  6. There is no welfare in Brazil, and you can hire soemone for as little as a dollar or two a day. That goes a long way to making any industry viable…

  7. Brazil also has an abundant supply of sugar cane, which is used almost exclusively. Cane can be converted to ethanol using only 20% (I believe)
    of the energy used for corn.

  9. I noticed that in their excuses for the company’s failure, they didn’t mention that ethanol is a crap fuel to begin with. Suppose you can’t fool all the people all of the time matters in the equation.

  11. I’ve seen the alcohol production area of Brazil, and be assured there is not a lot of manual labour taking place – it’s a big industry, and on the farming end they have to meet the weather constrictions just like any other farmer – so it’s all done with machinery. In the plants, it’s all high tech and computer control. Don’t make the mistake of assuming Brazil takes a back seat to anyone when it comes to state of the art.
    One big advantage Brazil has over Iowa and Saskatchewan is a 365 day growing season. Also you can buy a beer after shift for 30 cents a can. Best of all, the girls never wear snowmobile suits.

  12. dp, economics has nothing to do with it. Following the oil shocks in the late 1970s, the Brazilian government mandated that all gasoline had to contain 25 per cent ethanol content. The regulation has remained in place to this day.

  13. A commentator guest that appeared on CNBC a while ago made the point that the $4 billion/yr subsidy paid to the ethanol industry actually saved the US about $20 billion/yr in costs of imported oil.
    If that is true, and I do not know if that it is for sure at all, then the $4 billion would seem to be well spent.
    After all, one of their biggest problems is that they have too much money going out of the country creating an outrageous and unsustainable trade deficit.

  14. rockyt
    but one good thing about the heavy dependance on imports is that in the future when off shore oil becomes scarce, and we have increrased our efficiency in the use of oil, we (USA & CAN) willstill have untapped reserves, thusly , could become an exporter of energy and have the flow of dollars return (just quit electing dull minded liberals to office:-))))))

  15. Well, not that this is a securities analysis forum, but take a look at the numbers. At the end of 2006 they had a debt of $208M and at the end of ’07, it was $888M which is means it more than quadrupled in that year. By mid ’08 the long term debt was up to $1.4B. This company has a debt problem especially in this climate where debt will be more expensive. But their operating income and net income is going down, not up! Companies can get into trouble if their revenues don’t increase at the same rate as their expenses. This company is taking on massive amounts of debt and is not making more money, but less and less!

  16. Most bio fuels are a net energy loss. With out taxpayer subsidies, lost cause. Even Suzuki does not support them anymore. Says a lot.

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