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The Bio-Fuel Opportunity for the Stock Market

14 June 2007 - Features - Editor

A question doing the stock market rounds nowadays relates to the future of bio-fuels. Will they take center stage from crude or are they doomed to fail? We know that Brazil has made a success of long standing, both of pure ethanol, and a combination of it with regular gasoline, but why have other countries lagged behind? Are there genuine constraints, or are vested interests gumming up the works? What does the future hold for various players in this emerging industry?

Certainly, the technology is mired in some controversies. The stock market cannot fail to take note that influential quarters question the environment conservation benefits, especially if sulfur content is high. All farm produce is notorious for supply and price uncertainties, so questions about the abilities of farmers and agricultural companies to keep supplies going at competitive rates, will not go away easily. Besides, hydrogen fuel cells pose awesome challenges, especially after you drive on the Hydrogen Highway from California to British Columbia due North. Automobile manufacturers, especially from Europe and Japan, seem to prefer hybrid engines based on electricity to bio-fuel combinations with gasoline.

The fossil fuel industry and its supporters cast long shadows over the stock market arena. Even their most vociferous opponents will concede that crude refiners and marketers have done an admirable job of keeping all categories of stake holders reasonably satisfied, geo-political crises notwithstanding. The prospects of matching their distribution infrastructure are certainly daunting. A final boost for this industry may come from the revenues that countries in Africa have now tasted from crude.

Stock market opinion may be divided on the outcome of the bio-fuel battles with other sources of energy, but there can be no doubt that seed companies, with proprietary genetic manipulation technologies. They hold the keys to the kind of productivity which will give at least some room for field crops in the energy supply universe. Research and Development has been underway for about a decade now, so we can look forward to break through developments in the near future. Now is that an investment opportunity or what?

 


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