Ultimately, most everything I write in this column is about making money. Sometimes, my intent is obscure, lightly hidden in a personal anecdote or a small tale of someone else’s life. Sometimes, I directly express my moneymaking thought in an answer to a reader’s question. No matter whether I offer specific trading advice or suggest looking into longer-term investments, making money in the focus. Today is no exception, and my thought for today falls into the categories of both specific trading advice and longer-term investing …
U.S. dependence on imported oil fell below 50 percent in 2010 for the first time in more than a decade, thanks in part to the weak economy and more fuel-efficient vehicles, the Energy Department said on Wednesday. The department’s Energy Information Administration said it expected the moderating trend in U.S. oil-import dependency to continue through the next decade due to improvements in energy efficiency and even higher fuel economy standards.
The above statistic is quite remarkable and it affirms what I said a month or so ago – the transition to other forms of energy would happen much faster than conventional wisdom suggests. In fact, just this morning I watched an interview with the CEO of a company (Solazyme) that grows algae (one of the most abundant organisms on the planet) to produce fuel. The company just went public and it trades on the market under the symbol SYZM. Currently, it produces affordable fuel in large quantities for the U.S. Navy, among others, and, get this, two of its biggest partners are Chevron and Ecopetrol SA (EC), the national oil company of Colombia.
Years ago, I read about and wrote about algae (and other stuff) as a future source for energy. Back then, mainstream thinking considered it “pie-in-the-sky,” futuristic at best. Today, in May 2011, it is real and working. The beauty of it is that in our market system, progress in this area and the economy of scale will now accelerate as companies begin making real money by growing algae as fuel. In other words, the product will improve and the cost will come down, even though now it is only slightly more expensive than a barrel of oil (roughly $140 per barrel).
Aside from the fact that algae is hugely abundant on our planet, understand the process Solazyme created can produce oil in a matter of days, as opposed to a couple of million years. Now, combine this “oil-production” process with the incredible advances in solar production, wind production, and other major forms of alternative energy production and you have a burgeoning industry that will grow, as I have said, much faster than conventional wisdom suggests.
If you are not convinced yet that investing in alternative energy production is worth it, then go back to the excerpt above. One of the reasons for the dramatic drop in oil consumption is the rise in consumers buying fuel-efficient vehicles. Again, the same economic principle applies here – as more consumers buy more fuel-efficient cars, the more fuel-efficient cars manufacturers will make. Economy of scale will make these cars cheaper, thus perpetuating the cycle. So, if algae production is a bit long term for you, look to make money with car manufacturers and the ancillary suppliers now …
Trade in the day – Invest in your life …
