About two dozen other plants with an additional combined capacity of 2 billion gallons a year are currently idle, about half of them in bankruptcy, Hartwig said.

That is where big oil refiners, with much bigger revenues, come in.

The entry of traditional oil companies is part of a natural industry evolution, Hartwig said.

"You will continue to see the more familiar, farmer-owned model ... but the industry is big enough, diverse enough for different business models and ownership structures," Hartwig said.

Despite the ethanol industry's growing problems, demand for the fuel will increase. The U.S. Environmental Protection Agency's proposed renewable-fuels standards call for a jump in ethanol production from nine billion gallons last year to 36 billion gallons by 2022.

Under those standards, 15 billion gallons must be corn-based and the other 21 billion gallons from other biofuel sources such as willows or sugar cane.

That provision will effectively freeze the number of corn-ethanol plants that can be built and then used to apply toward the federal blending standard, said Sander Cohan, an alternative motor fuels analyst with Energy Security Analysis Inc. in Boston. Plants already built like Northeast Biofuels are grandfathered into the standard, he said.

"Basically, they get a share of what is now a limited market, and as ethanol demand increases, these plants will get more valuable," Cohan said.

Rick Kment of DTN in Omaha, Neb., said most oil companies were not interested in building their own ethanol production plants because of the financial risk.

"I don't think they intentionally decided to sit back and then pick off troubled plants as they became available. It was a situation where the market changed, and since it changed it gave them an opportunity they didn't have before," Kment said. "But now that they are available at discount, it can be profitable."

But don't be surprised if the top U.S. oil companies - Exxon Mobil Corp., Chevron Corp. and ConocoPhillips - don't make the leap, Kment said.

"For them, a 50 million gallon, or even a 100-million gallon plant would only produce a drop in the bucket of their total needs," Kment said.

A service of YellowBrix, Inc.