Alternative Fuels Investment Outlook

Investors must ask whether putting thier money into alternative fuels makes sense or is it a pipe dream or too risky.  The basic bottom line question becomes "Can fossil fuels be replaced?"

Well that question seems to be answered by the users of alternative fuels with an unqualified yes. In Echo, Oregon a local farmer has looked at the price of diesel and the cost of building his own biodiesel plant and opted to spend the $250,000 dollars to build his own plant. While Mid West plants tend to focus on soy biodiesel, Kent Madison in Echo will process the Canola he grows on his own farm. (Lies, Mitch, Capitol Press, June 2006).

There are actually 65 biodiesel plants currently producing fuel in the U.S. with another 50 plants under construction, not counting Madison’s plant. That plant is projected to be completed by the fall of 2006 and will produce more than Madison will use on his farm. He will sell the excess, probably around 250,000 gallons annually, to Sequential Biofuels for distribution to the public.

Production of biodiesel nationwide tripled in 2005 and is continuing to grow in 2006. The production in 2005 was 75 million gallons. One indication of how well accepted it has become are the prestigious consumers….The Department of Defense, Naval Station Great Lakes, Illinois uses biodiesel for base support transportation. The Department of Energy, Green Fleet Team, uses biodiesel at three of its major facilities, and the U.S. Postal Service has increased its use of biodiesel as well.

Perhaps the real question is not whether the stuff works or not….(the answer seems to be that it does)…..but will there be funding, a market, investors, and public support. I have been looking at the biodiesel industry but the ethanol producers are right in there with alternative fuels of their own and a look at both of these products show some interesting trends.