Alternative Energy: Just a Fad? (VSE)

Reuters reports:

The alternative energy buzz drove ethanol maker VeraSun Energy Corp. to a dazzling market debut on Wednesday, but investment strategists are skeptical about the chances to turn a fast buck in an energy form that remains largely a mystery to many Americans.

I’m in this skeptical camp. Good, bad, indifference aside, if oil prices ever drop back to more historically normal levels we’ll gradually stop hearing and caring about alternative energy. That’s just reality. It’ll go the way of that the popularity did for post 9/11 patriotic flags and bumper stickers, acid rain, the buy American campaign of the 80s, starvation in Ethiopia, so on and so forth.

That’s not to say these things aren’t important issues. It’s just that when it comes to do-gooding we are very faddish. And alternative energy seems to be in the same camp. I remember a surge of solar panels going up on roofs around the country back in the late 70s and early 80s. If the Brady Bunch were a real family they would have had one of those contraptions in their roof, and a six-foot satellite dish in the yard.

People have been losing money in fuel cell technology for a decade and more generally on alternative energies for decades. Ethanol seems to be in the same camp, especially since it’s a widely published fact that it can’t be produced efficiently, which investors are choosing to ignore, with the same magnitude of ignorance as they did investing in dotcoms with no realistic plan to produce revenue.

I hope this time is different and alternative energies do take off. If oil prices stay high long enough, it might be the case. But it's a very risky proposition for investors in run up and overhyped stocks.

Related: More coverage of Verasun Energy