Tatnic's Terrific Trades

Though I agree with your comments regarding the current uneconomical production and distribution of ethanol, I think you need to add another variable to your calculation.

Corn can be grown year after year, and should be considered a renewable energy source.

Once oil is out of the ground, it is not replaced within one year, nor is the exploration and development of new wells on pace to balance the yearly reserve drawdowns over the next decade.

Your current calculations are only considering present value of commodities. I feel that it is important to consider adding a future value element to the equation, but I do not have the information to complete the equation. I do think that the price of oil will escalate beyond what we all think is possible, and at that time ethanol will seem like a no-brainer alternative. There must be a tipping point.

I like your stock pick of The Andersons (ANDE)

Couple of comments. I've read parts of Peak Oil and when I first picked it up I was swayed by his arguement, esp. related to the giant fields in Saudi Arabia, but its also possible that with new (and expensive) technology, we can keep tapping those reserves. I just read an article in the Times not too long ago about a new use of steam to rejuvinate old wells (as being used in the US)...they claimed that many of the old, abandoned wells are perfectly viable now. And with new drilling technology, esp. deep ocean drilling, we can keep finding new reserves. But these new advances are very expensive so I'm guessing they'll insure that oil prices will stay lofty even though they open up new reserves. And we can't even begin to factor in the "terrorist" premium going forward, but I doubt that will ever go to zero. So I acknowledge that oil will never get real cheap but I also don't believe that ethanol will either. We can't expect our nation's working equipment to be powered by ethanol. A huge John Deere harvester won't run on ethanol....maybe biodiesel, but never ethanol. So it takes diesel to run the equipment to plant, harvest and distribute the corn and with the increased cost of energy, the cost of ethanol production will be tightly correlated to that increase. Its an energy intensive production, not efficient.

I have lived on farms and been around farms a good part of my life, and I know that growing corn is very hard on the soil. It cannot be done year after year without huge inputs of fertilizer. Farmers like to rotate their corn fields if possible with legumes one year (to add nitrogen and "green manure" to the fields), assuming they have that luxury of acerage. If not they walk the fertilizer to the fields and keep replanting corn, but after a certain point they have to stop and rejuvenate that field or it just isn't worth the cost of planting it from a yield standpoint. So while your statement about corn being a renewable resource is technically correct, it does not renew itself without huge inputs of resources, and growing corn is energy intensive. Sure you'll read articles about it being a net positive but don't believe them...they're wildly optimistic and biased in my opinion.

Last note....I was in Ohio a few weeks ago and saw that E85 was for sale in an Oberlin gas station, for a few pennies less than regular gas. I didn't see anyone pumping any but its not that simple. First of all your vehicle has to be equipped to do so, and unless you're totally ignorant of how to calculate gas mileage you wouldn't bother buying the stuff until it comes way down in price relative to regular (I'm assuming that 97% of the american public couldn't do the back of the envelope calc on the breakeven price, but that they could figure out their lousy gas mileage if they went through a couple of tanks). I just don't see how that will happen...its already subsidized to the hilt...are we going to subsidize it even more just to keep it on the market?

Though I agree with your comments regarding the current uneconomical production and distribution of ethanol, I think you need to add another variable to your calculation.

Corn can be grown year after year, and should be considered a renewable energy source.

Once oil is out of the ground, it is not replaced within one year, nor is the exploration and development of new wells on pace to balance the yearly reserve drawdowns over the next decade.

Your current calculations are only considering present value of commodities. I feel that it is important to consider adding a future value element to the equation, but I do not have the information to complete the equation. I do think that the price of oil will escalate beyond what we all think is possible, and at that time ethanol will seem like a no-brainer alternative. There must be a tipping point.

I like your stock pick of The Andersons (ANDE)

I believe you brought that to my attention last year...kudos to you.

Last year I got all excited after reading Peak Oil. I used to believe that $100/bbl oil was just around the bend, and even though I think oil prices will always carry a "terrorist" premium, I've given up worryiing about how high prices can go. We also have to add in the cost of mitigating global warming to any analysis, which if Murphy gets his way, will escalate beyond anything imaginable to us here in the year 2007. Good and bad...good for those willing to take a risk and invest in upcoming technology, bad for those who don't.

As for ethanol production, right now its a negative sum game with corn based ethanol. Unless we find a better substrate I don't believe ethanol will become the fuel of choice in the us. And I don't think it should if it means subsidizing corn production above all else. After all, its you and I that pay those subsidies (well, maybe not Lye, he probably gets his share of handouts).

[peanuts]

Though I agree with your comments regarding the current uneconomical production and distribution of ethanol, I think you need to add another variable to your calculation.

Corn can be grown year after year, and should be considered a renewable energy source.

Once oil is out of the ground, it is not replaced within one year, nor is the exploration and development of new wells on pace to balance the yearly reserve drawdowns over the next decade.

Your current calculations are only considering present value of commodities. I feel that it is important to consider adding a future value element to the equation, but I do not have the information to complete the equation. I do think that the price of oil will escalate beyond what we all think is possible, and at that time ethanol will seem like a no-brainer alternative. There must be a tipping point.

I like your stock pick of The Andersons (ANDE)

Ande

...while I firmly believe that allocating corn acerage to ethanol production, while subsidizing that production no less, has got to be one of the dumbest ideas to ever come out of washington, I still think ANDE is a good buy right here while its starting to power up.

Lets see, if my rough calcs are correct, the price of E85 has to be at least 30% cheaper than gasoline to be on parr (because of the lower energy content)...and it really should be 40% cheaper given the damage it can do to engine components. Idiotic...and lets not even get into the economics of growing, harvesting, processing, shipping, distilling, etc of corn to convert it to ethanol, then re-load and re-ship it so it can be distributed to gas stations. And throw in the increased cost of other farm products because of this shift to ethanol production from corn, ie beer, meat, the two staples.

Now if we legalized the growing of industrial-grade hemp, without subsidies, then we could possibly have something viable. We're talking about a weed that can grow almost anywhere without tons of chemicals or labor, and its by-products can be used for dozens of industrial purposes (chemicals, fiber, paper, cloth, oils/resins, etc) including the production of ethanol and other biofuels. And your exhaust would smell great But since there's no wealthy companies and lobbyists pushing for this, it will never happen in this country. There are however plenty of drug companies who do not want to see industrial hemp production legalized, but they don't mind the proliferation of meth labs and all the damage and decay they caused.

ATML--what's up?

...something must be up, the price is taking off here.

Ftek

Buying some here...I like what they do and how well they've done over the years. Plus the chart is at a point I find attractive.

...but a very interesting concept, ie using solar power to extract water from the atmosphere. (the ob stands for Oh brother).

Have had this one before but got bored with it. The company is selling stock left and right to keep their cash position up there, but the price keeps moving up anyway. I don't know the company well enough to guess whether or not they'll be around in the next 10 years, but the recent price action says something for them, ie fairly steady climb.

Worth a small position, but very speculative.

ok...I just dug a little deeper and conclude that wwat is not worth the investment to me anyway, at least not on any fundamental basis.

The only viable water-from-air extraction company is Aqua Sciences and they're private. I thought wwat fit this category but I'm not sure they do water from air tricks, I might have mixed them up with another company.

Now if Aqua Sciences goes public, then I'll be interested.

I could have and probably should have just split my refiner position 3 ways and bought equal amounts of vlo, hoc and fto...then that way I take the timing issue out of the equation. All 3 are strong stocks and should do well in the long-run, ie the next 3~5 years I'd say.

what's the matter with me....TSO should be in that august group.

Speculative Penny WWAT.ob

...but a very interesting concept, ie using solar power to extract water from the atmosphere. (the ob stands for Oh brother).

Have had this one before but got bored with it. The company is selling stock left and right to keep their cash position up there, but the price keeps moving up anyway. I don't know the company well enough to guess whether or not they'll be around in the next 10 years, but the recent price action says something for them, ie fairly steady climb.

Worth a small position, but very speculative.

I like this chart and the stock.

I could have and probably should have just split my refiner position 3 ways and bought equal amounts of vlo, hoc and fto...then that way I take the timing issue out of the equation. All 3 are strong stocks and should do well in the long-run, ie the next 3~5 years I'd say.

[skiracer]

Here's one to watch, because I think it bull charges through the R.

I like this chart and the stock. They are a player and if it shakes it out a little bit more it's a nice cup base. Needs a bit more handle and percentage wise it could breakout from above the line. Would be worth watching or buy at the end of the handle if you believe it will breakout. I know they are a player and were a leader when oil was peaking. This seems like a price that isn't going to be getting any cheaper if it does breakout above this line.

[New-born baby]

Yes...I agree. Its last "correction" of 33% lasted about 10 seconds.

Don't exaggerate, Tat. I think it was only about 9 seconds. lol

I would not short this bull. It's like the sign on the fence at the bull pasture: "If you want to cross this pasture, you need to be able to run the 100 yard dash in 9.9 seconds. The bull can run it in 10.0." Leave this monster alone for now. It's in a three up, looking for four down and run to five up.

Yes...I agree. Its last "correction" of 33% lasted about 10 seconds.

Here's one to watch, because I think it bull charges through the R.

I like FTO, HOC and VLO, all nice, fundamentally strong refiner plays. I chose FTO only because it recently broke out (32.5+/-), tested that level, and is bouncing here. Again, this is a "hurricane season" play for me.

[New-born baby]

VLO: watch it!

Here's one to watch, because I think it bull charges through the R.