So interesting has the biofuels debate become that The Slug would like to pose the question: “Is the biofuels revolution over before it even starts?”

Last month, when The Slug last probed the biofuels question, it was more about the broad question of changing habits and getting people to switch from conventional oil to unconventional liquids.

Now it’s become even clearer that the biofuels question is heading towards some form of crisis, as shown by these three points:

• On the Australian stock market, there is stark evidence that biofuels are no longer the flavour of the month, with the sector ranking as one of the worst performers over the past 12 months;

• On global commodities, there seems little doubt that the slide in oil prices has rendered many ambitious biofuels projects uneconomic; and

• Among the political elite in third world countries, where crops are being diverted from food to fuel, there is audible rumbling that the people might go hungry – and that spells very serious trouble.

On their own, the issued confronting a relatively new industry such as biofuels might be manageable.

Taken collectively, however, and the three issues spell major problems ahead for everyone jumping aboard the biofuels express which, as far as The Slug can see, is struggling to leave the station.

Consider the market first where stocks such as Australian Renewable Fuels, Australian Biodiesel and Natural Fuels have been hammered flat by investors. Mission Biofuels, a fourth stock examined by The Slug has done moderately well, though it too has suffered reduced support over the past two weeks as the oil price has eased.

At Australian Renewables, which is in the middle of a capital raising, the share price plunge has been alarming, with the stock diving from a high last year of $2.35 to recent trades at 37.5c – and to save everyone reaching for their calculators, that’s a fall of 84% from the peak price.

At Australian Biodiesel, the share price fall has been from a high of $1.69 to recent trades at 20c (down 88%), while at Natural Fuels the fall from $1.48 to $1.03 (30%) looks less severe but that $1.48 should be seen as the problem number because it is 2c below Natural Fuel’s $1.50 issue of late last year – in other words, Natural Fuels was a float that sank at birth.

The second point raised by The Slug this week – world oil prices – are beyond the control of the biofuel players.

But the recent decline in the oil price to around $US57 a barrel is pushing biofuel producers into their danger area of sub-$US50/bbl, and while every project has its own set of numbers, there is no escaping the fact that converting corn, canola, palm oil or some other biological product to liquid fuel, requires a high price to post a profit – or massive government subsidies, which are becoming harder to obtain.

Then there is the food versus fuel issue, the one which The Slug reckons could become the real show-stopper.

In Mexico, for example, there are rumblings over the price of corn for making food staples such as tortillas. In Brazil, there are equal concerns emerging over the diversion of materials which can be used to make food into biofuel production to power American cars. In Europe, there is an emerging “conscience” debate along similar lines about powering Porsches on German autobahns with fuel that could have fed starving Africans.

No one is saying (yet) that biofuels are in irreversible trouble. But The Slug can certainly hear warning bells ringing in the background.