IsThisRight

Pacific Ethanol Anticipates a Gloomy Q4

Q4 estimates numbers ( released so far) are NOT the whole story:
1/ Oregon was to come online in 1Q08 ( law was passed, plant was built...). So PEIX started puttin in storage in Oregon enough ethanol to serve a BRAND NEW MARKET. So their business incurred the cost of buying the corn, operating the plant and not getting the revenue until the grand opening of the market. This only happens once. And it is a GOOD THING.
2/ Since ethanol price in 1Q08 is higher than 4Q07, even if there was no new market, would you not like to hold back on $1.97/gallon and sell 3 months later for $2.20-$2.30/ gallon?

Come'on... everyone jumps on 4Q07 numbers without a single thought about market condition in 1Q08.

By the way, PEIX is not driving the U.S. SouthEast market supply. But other companies, with their eyes on FL, NC... will have to do the same thing ( build-ahead) in order to develop these NEW markets.