My Ponytail developed mealy bug – lots. I sprayed the hose on it then wiped the leaves with oil. But – after a week the leaves closest to the crown, turned white and began to fall out with the slightest touch. Top part of stem is shrivelling. Can I cut a section of stem off? The plant is about 1 1/2 meters tall.
Mealybugs attack plants that are under stress for other reasons. The dying back of new leaves and the shriveling of the trunk are not caused by the mealybugs. Those are symptomatic of root damage. Because Ponytails can withstand drought quite well, inadvertent over watering and root rot is the likely cause. Unfortunately, by the time the stem shrivels and new growth dies, it is usually too late to save the plant because the roots are already dead.
In general, Ponytail Palms must be very close to an uncovered sunny window. They must be kept very tightly potted and watered sparingly only when the top half of the soil is very dry.
If the upper stem was healthy, then cutting it back would be an option. However, your Ponytail is actually dying from the bottom up so cutting off the top will not lead to new growth.
As for treating the mealybugs, wiping is wasted effort. Use a spray solution of 5 parts water, 1 part alcohol and a squirt of liquid soap and spray deep into all the crevices where leaves attach to the stem. Be sure to cover all leaf and stem surfaces until they are dripping wet. Unfortunately, in your case eradicating all of the mealybugs is unlikely to save the plant.
Sorry I don’t have better news for you, but this process has been going on for a long time and mostly out of sight amid the root system.