Source: FT.com

Investors, such as Microsoft’s Bill Gates, are sitting on billions of dollars in losses after buying into the corn-based ethanol industry that George W. Bush embraced as the answer to US energy woes.

Six of the biggest publicly traded US ethanol producers have lost more than $8.7bn in market value since the peak of the boom in mid-2006 and the beginning of this month, according to an analysis by the Financial Times. The boom followed a 2005 law requiring refiners to mix billions of gallons of the biofuel with petrol.

Investors who bought and held shares in hotly anticipated market listings of Aventine Renewable Energy, VeraSun Energy and other ethanol producers that have gone public since 2005, have seen the value of their holdings plummet as much as 90 per cent from their flotation price, in spite of billions of dollars of government support for the industry.

The losers in the ethanol investment frenzy, which some have compared to the dotcom mania of the late 1990s, include famous names, such as Mr Gates, Microsoft founder. His private investment firm has lost millions on its 2005 investment in a company called Pacific Ethanol. Mr Gates’s firm, Cascade Investments, did not return calls seeking comment.

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