The United States Ethanol Industry benefits mainly from federal subsidies, tariffs, and production mandates. Oil refiners get a credit of 51 cents per gallon of ethanol blended with gasoline. The typical blend is 90% gasoline/10% ethanol. Due to a federal dictate, more than half the gasoline sold in the U.S. now contains ethanol, which accounts for 7% of total gasoline consumption. There is also a 54-cents-a-gallon tax on imported ethanol. The government mandates that 9 billion gallons of ethanol be used this year, rising to 10.5 billion in 2009 and 15 billion by 2015.

Critics make a valid point that ethanol producing companies are only surviving because of strong backers in the Capitol Hill. Ethanol is also widely criticized as a wasteful and inefficient way to fuel automobiles.

Oil refiners are blending ethanol on their gasoline because it makes economic sense. Ethanol now costs $2.50 per gallon — or about $2.00 a gallon to refiners after the federal subsidy. The wholesale price of gasoline is above $3.30 a gallon.

This means that refiners save about $1.30 per gallon by using ethanol rather than pure gasoline. The savings per gallon of a 90/10 blend of gas and ethanol relative to pure gasoline is about 13 cents (10% of the $1.30 differential between ethanol and gasoline). Much of that gets passed on to consumers.

Ethanol may be controversial, but it has powerful friends in Washington and is helping millions of cash-strapped Americans save money on gasoline. This suggests that the ethanol industry is here to stay.

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Asian stocks drove the benchmark index down, amid a worsening credit-market as losses pile on top of the other. Speculation has it that the high borrowing costs might lead to steep declines in earnings.

When Lehman Brothers Holdings Inc posted a loss of about $2.8 billion other firms followed suit, and Macquarie Group Ltd. as well as Babcock & Brown Ltd. also incurred heavy losses as they plunged hard in Sydney trading.

The Industrial & Commercial Bank of China Ltd. declined after a government mandate telling the banks to increase reserves. This would be the fifth time Chinese banks will be increasing reserve in 2008. Orient Overseas International Ltd. came down ahead of other shipping companies on speculation that surging oil costs will pare down profit.

The MSCI Asia Pacific Index fell by 2.1 percent to 144.26. There were about six stocks that incurred losses for each one that gained. The outlook is bleak as financial and industrial stocks declined, pulling down the rest of the 10 industry groups with it.

It will take a very long time - up to several years - before the present credit problems can be sorted out within the system. What we see now is a market that’s highly reactive to rising interest rates. It is this fear that’s making the market highly volatile nowadays.

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Hong Kong stocks came down dragging the benchmark index to its steepest drop ever in a period of three months, following China’s announcement to the effect that banks should increase reserves, which if ever, would be the fifth time in 2008.

One of the biggest loser recently was Industrial & Commercial Bank of China Ltd., which is China’a largest bank in terms of its market value. The bank’s losses was the most experienced by it in more than four months. Hang Lung Properties Ltd. also fell and led other developers down the losers’ path. Cathay Pacific Airways Ltd., the largest Hong Kong airline, fell heavily in a span of time that exceeds two months after the cutting of its rating to sell by UBS AG.

The Hang Seng Index declined 3.6 percent or 870.25 to 23,531.93, which was the company’s hardest fall counting from March 17. The Hang Seng China Enterprises Index, which tracks mainland Chinese companies’ H shares, plunged 5 percent to 12,835.70, the firm’s biggest loss since April 14.

“Things seem to be worse than expected and general market sentiment is being hit. We tend to favor energy stocks, but avoid oil users given rising oil prices,” according to portfolio manager Nancy Lee, Taifook Asset Management Ltd., Hong Kong.

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Australian banks declined as they led the S&P/ASX 200 benchmark to its steepest fall in a span of three months. This came after Lehman Brothers Holdings Inc. posted a total loss of $2.8 billion while the Federal Reserve of the United States indicated that they may hike interest rates.

The S&P/ASX 200 Index came down by 154.60 points to 5,437.50 or a 2.8 percent change, and the All Ordinaries Index fell down by 2.6 percent or by 146.90 points to 5,544.30.

The largest Australian securities company Macquarie Group Ltd. lost A$4.19 to A$51.80, a change of 7.5 percent, which was the worst decline counting from March 13. Another company that lost a sizeable amount of money was Babcock & Brown Ltd., which is Australia’s second largest investment company. The firm tumbled down 74 cents, or 6.6 percent, and is now down to A$10.42, the company’s lowest price counting from May 2005.

National Australia Bank Ltd., also came down A$1.57 (5.3 percent) to A$27.95. Commonwealth Bank of Australia was not spared as it hit bottom at A$1.53(3.5 percent) to A$41.87, the lowest decline since March 17.

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UK stocks declined this week for the third day. This decline was headed by travel companies as well as banks, following a New York oil rally and a report that revealed the worsening state of the labor market in the United States which gets increasingly severe as US unemployment rate exceeded May forecast.

As is the usual case with airline companies, British Airways Plc is closely tied to fuel prices and expectedly declined as crude oil soared above $130 per barrel. Standard Life Plc also led financial companies’ decline following Deutsche Bank AG’s recommendation regarding the selling of investors’ shares. However, commodity producers such as BHP Billiton Ltd. and Tullow Oil Plc, realized some profits, which in a way has curbed declines in these companies.

As oil prices rebound sharply we can see how volatile the market can be. It is indeed a dangerous thing to just begin playing those stocks that stand to lose from surging oil prices such as airlines.

Europe’s biggest airling, the British Airways, lost 7.2 percent or 236 pence. The world’s largest cruise-line company, Carnival Plc, declined 3.4 percent to 1,875 pence.

The FTSE 100 Index has gone down 54.8, or 0.9 percent, to 5,940.5 at 3:39. This week, it has extended the loss to 1.8 percent. Whereas, earlier, the measure gained up to 1.3 percent. As the regards the FTSE All-Share Index, it came down too by 0.5 percent.

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Recently US stocks, in nearly two months, surged the most. This was led by both energy and retail companies, on speculation of an oil price increase to $5 per barrel and Wal-Mart Stores Inc. as well as Costco Wholesale Corp. sales that exceeded analysts’ forecasts.

The gains have made the Dow Jones Industrial Average gain up to 214 points and were responsible for the tremendous rise to its highest ever, since January 3, in Nasdaq Composite Index as it closed. Exxon Mobil Corp. has posted huge gains as it led energy shares to their highest leap counting from March boosted by a weaker dollar.

Wal-Mart is on a four-year high climb, while Costco, in 11 weeks in a row, realized huge gains.

Rallying the most in five years, Verizon Communications Inc. has become the largest mobile communications company in the United States after the firm’s wireless unit agreed to purchase Alltel Corp. in a $28.1 billion deal.

According to experts, despite the fact that the economic conditions look bleak, things aren’t really that bad, since there are still some glimmer of hopes as the market from time to time breathes a “sigh of relief.”

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Asian oil producers and US sales-reliant Japanese companies led the recent Asian stocks advance. This occurred right after prices of crude oil surged to record high in two months while the yen succumbed to the US currency in a three-month low.

Mining company BHP Billiton Ltd. (the world’s biggest), and oil explorer Inpex Holdings Inc. (the largest Japanese oil explorer) gained. JFE Holdings Inc. emerged ahead of all the other steelmakers following the time when Nucor Corp. posted huge second-quarter profit due to increase demand worldwide. Getting approximately 50 percent of its sales from North America, Honda Motor Co., surged in Tokyo on bets that a weaker Japanese currency will boost the sales value in the United States.

Japan, being an export oriented economy, can take advantage of a weaker yen and gain in currency exchange.

The recent gains have indeed helped the benchmark index, which hardly changed through the end of May, get rid of earlier losses to surge 0.1 percent.

“Behind the rising oil price is the resilient global economy, driven by emerging countries. The current exchange rate is weak enough to relieve investors’ concern a stronger yen will erode company earnings,” according to senior strategist Yoshinori Nagano, Daiwa Asset Management Co., Tokyo.

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Early next week, the Lehman Brothers Holdings Inc. may raise up to $5 billion in capital. The company, which is the fourth-largest securities firm in the United States, from the time it went public in 1994, may yet report its first ever quarterly loss, according to a company insider.

There is an overseas investor and one US pension fund, at the very least, that Lehman executives are talking with as regards the terms of a transaction. However, a rights offering, wherein existing stockholders can have the right to buy discounted shares, is not part of the present plan.

This year, Lehman plunged by 48 percent in New York Stock Exchange as the company deals with problems regarding the decline of the mortgage as well as structured credit business.

Amid low real estate-backed debt securities and high-yield loans demands. The securities firm is doing its utmost to minimize leverage, or the assets versus shareholder equity ratio

In April, Lehman was able to come up with $4 billion from a sale of convertible preferred shares. This was done to weed out speculation that the company was dire need of capital. By issuing subordinated bonds and some other kinds of securities, the securities company, all in all, was able to raise $8 billion.

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Royal Ahold NV, which is based in Amsterdam, realized an unexpected profit during the first quarter as it raised operating margin target for the full year following a Dutch chain’s sale, according to owner of Albert Heijn.

The company realized an 8.9 percent in net income that translates to 258 million euros or approximately US$402 million, which further translates to 22 cents per share, from the previous year’s 237 million euros, or 15 cents, the company said, as it exceeds the 224 million-euro median expert estimates.

The company during the past has spent as much as $19 billion on takeovers. However, this activity came to an abrupt stop when Ahold, in 2003, got involved in an accounting scandal. Currently the company has sold assets in order lift company earnings, as it puts more effort on retailing.

The profit realized by the company soared as this giant grocery chain enticed its customers its prepared meals, helping counteract declining US earnings, where the company busied itself with its price-cutting spree in order to compete with another entity called Supervalu Inc.’s Shaw’s chain despite the turbulent economic conditions.

Petercam analyst Fernand de Boer, in Amsterdam, who gave Ahold a “buy” rating on company stock said “[i]t’s positive that Ahold raised its margin target even though the situation in the U.S. is getting tougher.”

Amid investors’ opposition, France Telecom SA has made an offer to buy TeliaSonera AB. The said offer was for 252.5 billion kronor or approximately US$42 billion. The reason investors are opposed to this deal is that it would simply erode value.

During the previous month, approximately 9 out of 10 investors were openly against the deal between these two telecommunications companies as they could not see any real advantage to the merger, whether financial or strategic.

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TeliaSonera and the Swedish government have jointly rejected France Telecom’s bid and in effect saying that the offer is not high enough. The Swedish company therefore is open to better offers.

France Telecom claims that the merger would have created the largest telephone company in Europe. That it has the potential of increasing customers by as much as 39 percent or 237 million that could save both companies nearly 700 million euros per year by 2013.

Having declined by 26 percent this year, France Telecom has recently incurred a 5.1 percent loss in Paris trading. The buy offer for TeliaSonera has hurt stock value and may continue to do so as bets regarding an increased bid abound. Recently France Telecom came out as the worst performing stock among 20 other European counterparts, while TeliaSonera shares soared 29 percent.

The deal has been labeled “a poor deal for both parties” or “a dreadful deal” by analysts.