The Next Chapter (and Opportunity!) in Ethanol
I apologize for the brevity of today’s article, but I have a long drive ahead of me.
Most of you probably think I’m just a research fanatic that locks himself in the office for hours on end… well, you’re right. But fact is, I grew up on a farm. For those with farms in the family, you know you’re never free from the work that it entails, even if you grow up and move away. And right now it’s time for our wheat harvest.
So by the time you read this, I’ll be well into the 11-hour drive from our StreetAuthority offices in Austin, Texas to the farm in Kansas.
Though it’s smack in the heart of wheat country, we occasionally grow corn on the farm, which got me wondering about the future of ethanol. My dad had considered investing in it 25 years ago.
So I did a bit of research (naturally), and found out there is a major opportunity there — but not with corn.
The future of corn-based ethanol is limited. Federal law calls for a ceiling on output in 2015, after which there is no more opportunity for growth in the domestic market. But there’s another type of ethanol, which federal law refers to as advance biofuel, that should see fantastic growth.
It turns out that this type of ethanol, which is chemically identical the corn-based version, is made instead from the sugar in plants. This sugar, called cellulose, has been out of humanity’s reach for much of history. But that has changed. Special processes using agricultural waste and other so-called biomass can now be used to produce ethanol. Anything that is plant-based can be turned into fuel, from rice straw to paper.
The demand for this type of ethanol is laid out in federal law. This year, that production schedule calls for 6.5 million gallons of this cellulosic ethanol. By 2022, however, that will have surged to 16 billion gallons.
That’s a pretty big increase. I’ve found one company at the forefront of the major push for this “game-changing” opportunity. Simply click the play button below for my short audio chat about this stock (including its name).
If you’re you interested in hearing about three other game-changers, you can visit my archived webcast that I held earlier this week. Click here to watch it for free instantly.