High corn prices are making it tough for ethanol producers to acquire affordable feedstock, and rattling investors nerves. Even ethanol companies that don't use corn are taking a hit in their stock price.

BlueFire Ethanol has seen its stock swing from under two dollars a year ago to more nearly $8 in January, and then lost nearly half its value to $4.35 today.

BlueFire CEO Arnold R. Klann issued a letter to shareholders to calm fears that something was amiss: BlueFire cannot attribute the stock decline to a single cause but the overall market decline, traditional producer shortfalls and aggressive selling of the company's stock may have all influenced the stock price... The recent sharp decline in stock price does not reflect where we are currently as a company."

According to the company, the first of its U.S. based plants that will turn agricultural waste into ethanol is on track to open in Lancaster, CA next year, and another 19 plants are in development.

Logic would suggest that if corn-based ethanol becomes too costly that there is greater opportunity for cellulosic ethanol, but perhaps investors aren't thinking long term. A shakeout is coming with considerable consolidation in the ethanol industry, but innovative technologies should be winners as they are acquired by traditional energy companies looking to diversify.