Ethanol and Oil Sands Stocks at Risk?

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

HEARD ON THE STREET: As Energy Prices Sink, Many Firms Are Buoyed

• Summary: If oil and other commodity prices do continue to fall, which stocks will benefit? The Heard on the Street column lists the stocks that should benefit: Bianco Research LLC in Chicago claims that airline stocks such as AMR Corp (AMR) have the highest inverse correlation to the oil price. Other beneficiaries include retailers such as Wal-Mart (WMT), Target (TGT), Costco (COST) and Home Depot (HD), casual dining restaurants such as Applebee's International (APPB), car manufacturers such as (GM) and Toyota (TM), chemical companies such as DuPont (DD), and paper producers such as International Paper (IP).
• Comment on related stocks/ETFs: Are these really the most leveraged plays on a falling oil price? Arguably not. First, you can simply short the US Oil ETF (USO), though David Fry says it's hard to borrow. Better (though risky), you could consider shorting the most speculative "peak oil" plays: the ethanol and oil sands stocks. Ethanol stocks include Andersons Inc. (ANDE), Archers Daniels Midland Company (ADM), Aventine Renewable Energy (AVR), Green Plains Renewable Energy (GPRE), MGP Ingredients (MGPI), Pacific Ethanol (PEIX), Pendford (PENX), SunOpta (STKL), VeraSun (VSE), and Xethanol (XNL). The sector faces increasing supply of equity due to IPOs, yet the market has been increasingly unreceptive. And many of the individual stocks may be problematic. Pacific Ethanol, for example, was subject to insider selling and dilutive financing earlier this year. Detailed coverage of ethanol stocks is here. Oil sands stocks that trade on US exchanges include Canadian Natural Resources Ltd (CNQ), Petro-Canada (PCZ), Nexen Inc. (NXY) and Suncor Energy Inc. (SU). Oil extraction from oil sands is expensive, so these stocks should have dramatic downside leverage if the oil price falls signficantly.