It's not your imagination... it is getting more expensive to
fill up at the gas pump.
We had a reprieve for several months. Following the crash in oil,
gas plunged well below $2 a gallon. Now it's knocking down the $3
As a car driver, you might be sweating the increase. As an
investor, you should be welcoming it with open arms.
The logic is simple, yet solid. As prices at the pump inch higher,
the United States will again begin to look seriously at alternative
fuels. For some, this will mean electric vehicles, but for most,
the question will be: How can we get cheaper gasoline?
The answer is biofuel -- but not the biofuel that's been rehashed
time and time again in the mainstream press.
No, the real story comes from a little-discussed piece of
legislation that dates back to the Bush era. And it has
"game-changer" written all over it.
When Congress passed and President Bush signed the bill that
codifies a federal biofuel productionquota into law, it called for
a range of biofuel, not only the corn-based ethanol we've all heard
Also included in the legislation was a call for sugar-based fuel
that the government calls "advanced biofuel." This is code for
cellulosic ethanol, which isn't made from traditional sugar sources
like cane, but from a non-traditional source called cellulose, a
type of sugar that's found in all plant life.
This sugar is hard to get to. For much of recorded history, only
animals, notably cows, have been able to get energy from this type
of sugar, which is locked tightly in the cell walls of plants. Now,
using specially designed enzymes, producers can tease out the
sugar, ferment it into ethanol and make biofuel from agricultural
waste like wheat straw or corn stovers, from special grasses or
even scrap wood and paper.
There's actually a company that collects wastepaper from Congress
and turns it into fuel -- one of the few ways I know of to extract
something useful from Washington!
The federal output table for biofuel calls for billions of gallons
of corn-based ethanol, up to a maximum of 15 billion gallons in
2015 -- but that's a little more than a quarter more than we're
currently using. The real growth in this fuel will be from
cellulosic ethanol, of which the United States produces only a few
hundred million gallons a year.
In the coming years, however, that output will raise exponentially,
to a mandated 16 billion gallons by 2022. This represents the best
hope to not only decrease our national dependence on imported oil
but also to lower the cost of gasoline.
Here's the best news for aggressive investors: The companies in
this space have been much maligned.
For years, cellulosic ethanol and the idea of growing our fuel have
been dismissed as pie-in-the-sky dreams. But the science has caught
up, lawmakers have embraced it, and now a lot of major oil
companies are bowing to the inevitable future of biofuel.
There's no other industry that has as much growth potential in the
next decade, and it's my prediction that cellulosic ethanol will
gaincurrency as an investment trend beginning this year. I think
you'll begin to see the media report on this topic when the price
of oil returns to the $100 a barrel level. ["
Why $100 Oil Could Make or Break Your Portfolio in
Until then, though, companies like
Verenium (Nasdaq: VRNM)
and their fabulous potential are ripe for the picking -- at a
fraction of their
. My wisecrack about the effectiveness of Congress notwithstanding,
Washington is on the case and is dispensing significant funds for
research into how to advance cellulosic ethanol on the
infrastructure side -- how to get it from the fields to your gas
Action to Take -->
There's no doubt companies like Verenium are aggressive plays, but
you can't simply invest solely in blue-chips and expect your
portfolio to rake in profits. (Or sometimes any profits for that
matter -- $10,000 invested in
General Electric (
five years ago would be worth about $6,500 today).
As other companies begin to invest in ethanol plant construction,
the price of oil will help create a perfect storm. And the earliest
investors stand theprofit most.
If you're interested in the game-changing future in cellulosic
ethanol, I think you'll enjoy my new
videocast. From tiny nuclear power plants that can be buried in
your lawn, to revolutionary pain killers made from cobra venom, I'm
convinced these game-changing ideas could take off in the coming
year. To get briefed on these opportunities, and several others,
please watch this video
Disclosure: Neither Andy Obermueller nor StreetAuthority, LLC
hold positions in any securities mentioned in this article.