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| The Jersey Devil |
 Posted: Wed Apr 26, 2006 11:57 am Post subject: Buying into the "Renewable Energy" Craze in Real-L |
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Investing Manager
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This is a continuation of this topic that I had started before about Ethanol and Oil in the US, but this topic is geared more towards real-life investment options that we can't do on the site. So here goes...
Crude Oil prices recently reaching record highs has started getting people to think a lot more about alternative fuels in the US and a movement toward oil independence. The United States government is even concerned, with President Bush saying that Americans are "addicted to oil" and that we must increase production of alternative, renewable fuels. In a recent speech President Bush explained his plan to accomodate the alternative fuel Ethanol into the American lifestyle, and that he will personally visit existing plants and producers of fuel-cells in order to get a closer look at the developements being made to get Americans off of oil. Plants are popping up or planned to be built all over the place as the nation gears up to meet the Ethanol expectations set by the government. When these plants are completed and the demand for Ethanol starts to increase, demand for the base material to make the fuel, corn, will also increase, and while demand goes up as supplies are still being grown and are lower than required, prices will increase as well. This would also be beneficial to companies that produce Ethanol and products that use it, as demand for their business will go up and they will have to produce the supplies to fill that demand.
So wouldn't it make sense to get into the Ethanol market now, either in the US or worldwide, while it is still mostly untapped and in its earliest stages? It would be smart to do the homework and find out which companies are putting the most into producing these Ethanol products and are primed for growth in the market to invest in. To me the most profitable route would also be a very risky one, which would be to buy long-term options contracts (LEAPs) on a very slim margin. You could also buy long-term corn futures contracts on a slim margin, which might have less of a return than picking the best growth company and buying the options contracts, but could also be less risky because all of these Ethanol producing companies will need corn in order to make the fuel.
These are just a few ideas on how to make out on the new energy "fad" that is starting in the US. I am new to the game but I do understand the risks involved in investing in such ways that I described, but I also understand the potential rewards that are possible. Any thoughts? |
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| pepe |
| Posted: Wed Apr 26, 2006 1:00 pm Post subject: |
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past the ethanol craze that's the bound to hit there's also the possibility of hydrogen...
http://www.signonsandiego.com/news/state/20050526-1743-cnshydrogen.html
I saw a news story the other day on Schwarzenneger attempting to lead a charge into Hydrogen. I think it's a much worse replacement fuel than Ethanol. Its only byproduct is steam but the Hydrogen cells are more costly and are very hard to keep cool, which in turn requires more energy from alternative sources. A consumer hydrogen-powered automobile at this time costs upward of $1M.
Also, don't leave Sugar Cane out of your speculation. From what I understand more ethanol can be harvested from Sugar Cane than Corn. |
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| The Jersey Devil |
| Posted: Wed Apr 26, 2006 1:58 pm Post subject: |
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Investing Manager
Joined: 20 Mar 2006
Posts: 254
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Location: Sewell, NJ
61165.85 e$
Net worth: 78,305.85
Portfolio Value: 17,140.00
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| That's true, it's why Brazil is independant of oil now (or at least very close to it)... because they produce so much Sugar Cane and turn it into Ethanol. But I'm thinking more for American companies, who have easier access to a greater supply of corn than sugar cane, if I'm not mistaken, to make ethanol out of. Good suggestion though, I completely forgot about that. |
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| efflandt |
| Posted: Wed Apr 26, 2006 2:21 pm Post subject: |
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Investing Manager
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There are companies experimenting with microbes to convert junk vegetation into sugar which can be fermented into alcohol, instead of using foods like corn, sugar cane, and sugar beets. But not sure how successful they have been yet. One name I heard mentioned was Logan.
For now my alternative energy play (not necessarily renewable) is Sasol which is up 23% since I bought it in August. They have a 50 yr old proven method of turning natural gas or coal into liquid fuels and chemicals which is profitable if oil is over $30. They are looking at potential projects in Montana and Pennsylvania. |
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