Ethanol producer Hawkeye Holdings Inc. delayed an initial public offering on Monday that was scheduled to debut this week.

Ethanol stirred investor enthusiasm earlier this year amid skyrocketing oil prices, but the buzz has since cooled.

In addition to mounting criticism of the fuel as a viable alternative to gasoline, energy prices have fallen and shares of other recent ethanol listing are suffering.

"This is not unexpected, but it is a little bit discouraging from the ethanol standpoint," said Chris Manns, president of Traders Group Inc., a brokerage firm focused on financial and agricultural commodities markets.

The third largest U.S.-based ethanol producer was set to sell 15.9 million shares Thursday and raise $350 million if priced at the midpoint of a forecast range.

Assuming an offering price of $22 a share, the company would have an initial market capitalization of about $855 million, according to information included in the prospectus.

Despite a record sales and earnings year, the Iowa Falls, Iowa-based company decided to delay the IPO "in light of current conditions in the equity markets and the recent pullback in the energy segment in particular," Chief Executive Bruce Rastetter said in a statement.

The company does plan to continue with a "growth plan," which includes breaking ground in October for a new plant in Menlo, Iowa.

But the IPO delay is the latest blow for the industry.

Ethanol, which is domestically manufactured from corn, is a renewable fuel used to reduce pollution and to extend gasoline stocks.

It possess possible economic and environmental advantages over fossil fuel, but faces significant hurdles to widespread use, including high costs, limited land and water availability and mixed government and corporate support.

The June IPO of ethanol producer VeraSun Energy Corp.(VSE)rose 30 percent in its debut, bolstered by soaring gasoline prices and growing national sentiment to shrink reliance on foreign oil.

But VeraSun shares have since plunged, falling 20 percent from their offering price.

Another ethanol producer, Aventine Renewable Energy Holdings Inc. (AVR), which made its debut only weeks later, has done even worse, tumbling about 44 percent from its IPO price.