Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Biofuels About to Take Off - Just Not Yet

Commodities / Renewable Energy Jun 06, 2011 - 03:26 PM GMT

By: OilPrice_Com

Commodities

Investors looking for the next big thing after a hydrocarbon economy have a panoply of options, from solar to wind, as well as biofuels.

In terms of quickly ramping up production biofuels clearly win the race, but navigating the PR fluff and reality is not a simple thing.


The three main contenders for investor dollars are algae, jatropha and camelina. All have strengths and weaknesses, leaving investors to choose amongst them. Stripped of PR flummery, the only issue is where and when production can begin on a viable commercial scale. Investors who unravel the complexities of biofuel production and have cast-iron stomachs stand to profit, but biofuel production in the U.S, while having major players like Goldman Sachs and the Carlyle Group, are moving their chess pieces around a board already gamed by the major players.

While everyone agrees that biofuels are the future, investment is lagging.

But the interest is there. Fuel and oil comprise 25 percent of civilian airlines' operating costs. When the price of jet fuel rises one cent, it increases the global cost of aviation $195 million.

Camelina as an additive is a "drop in" fuel - engines need no modification, and a series of Pentagon tests over the last two years have proven its feasibility as something to add to a 50 percent JP-8 blend. The Pentagon

So why, no U.S. production?

The answers are both complex and simple.

First, new biofuels are up against the well established ethanol lobby.

Secondly, given renewables' battle against the ethanol Goliath, there are yet exist no subsidies, crop insurance or any other incentives to bring farmers onboard to provide camelina feedstock, and farmers are hardly the most progressive green community.

Accordingly, U.S. companies such as Sustainable Oils face an uphill battle to sign up farmers, one by one.

But the technology exists, the product has been approved, most notably to fuel USAF C-17 Globemasters, as further Pentagon weapons testing continues.

Unfortunately for biofuel producers, the Pentagon only purchases fuel, and does not invest.

So, at the end of the day, the Pentagon role is passive - as for the civilian market, they are awaiting commercial volumes to be produced.

U.S. production to ramp up camelina derivatives is constrained by a lack of subsidies, crop insurance and record-high commodity prices for such alternatives as ethanol's major feedstock, corn.

But camelina's future as a civilian aircraft biofuel has been validated by the March announcement that a European consortium announced a project to produce Jet A-1 for civilian aircraft. European aircraft manufacturer Airbus and Romanian state-owned airline Tarom and a consortium of partners announced plans to establish a bio-fuel production center in Romania to manufacture fuel for the airline industry.

An American company is also prosing to produce biofuel in Uzbekistan.

So, the question is - how ironclad are investors' stomachs? The question is no longer if biofuel will be produced - only where and when. Given that it is ultimately an agricultural product, sharp investors may see their profits expand before the end of a growing season.

Source: http://oilprice.com/...

This article was written by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude Oil, Geopolitics, Gold and most other commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

© 2011 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in