Pacific Ethanol Inc (NASDAQ:PEIX) is one of the largest ethanol producers in the world. Every gallon of gasoline has a mandated level of ethanol in it. As gasoline demand rises, so does demand for ethanol. This recent fall in gasoline prices should benefit Pacific Ethanol. While this drop in gasoline prices is a positive for the company, it is not even close to the main driver going forward. The big key to profitability for Pacific Ethanol is the massive drop in corn prices over the last year. Corn is the main input cost in ethanol and the commodity is trading at multi-year lows.
Between the lower gasoline prices which increase demand and the input cost of corn at multi-year lows, ethanol producer Pacific Ethanol has a real shot to turn a profit in the coming quarter.
Gareth Soloway
InTheMoneyStocks
