Accusations of Disinformation, Speculation Make Biofuels Stock a Wild Ride

On September 13, 2005 Earth Biofuels, Inc. (ticker symbol EBOF), was at around 17 cents a share.  On May 11, 2006 it had reached $7.23 a share, a staggering 4200% increase in eight months.  Currently, (July 21, 2006) EBOF has given back about half of that ground is trading at $3.41 a share or a still very respectable 2026% increase in slightly over 10 months.  Earth Biofuels, (manufacturers of the biodiesel brand known as "BioWillie", named after the country and western performer Willie Nelson, who has powered his tour buses with biodiesel for a number of years) presumably has had the advantage that star power (actors Morgan Freeman and Julia Roberts are also board members) provides.   Conversely, stocks such as Consolidated Biofuels (CSBF) have had a much rougher go of it.  From its high on September 28, 2005 of $11.25 CSBF has fallen to trade at just 15 cents a share today and may well be in free fall.  

To a lesser extent the ride has been just as rough for ethanol stocks such as the Bill Gates ethanol vehicle, Pacific Ethanol (PEIX), Xethanol (XEN) and the blue chip of the group Archer, Daniels, Midland (ADM) for whom ethanol (and wind) production is just one division.  As a new technology, some biofuels stocks have subject to both wild valuations (an expert at Zachs.com compares the current valuations to the Internet bubble of the 90s), and all have been both the beneficiaries and victims of the news cycles.  Even the fundamentals of what on the surface appears to be a not particularly complex technology are the subject of wild debates in the media and online, with both the biofuels lobby and the anti-biofuels lobby accusing one another of deliberate disinformation.