Profiting from the Pickens Plan: FAN, Clean Fuels, Fuel Systems 50 comments
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As many of you probably know, oil speculator extraordinaire T Boone Pickens has a plan, a plan to save the world from itself in the form of clean energy (well sorta, more on that later). Mr. Pickens, I applaud you for your efforts and for stepping up at a time when government agrees to disagree on just about every issue including investments in green energy solutions.
The Pickens Plan was announced a few days ago and its aim is simple, at least on paper. Decrease our dependence on foreign oil and do it now with the use of wind power and powering vehicles with natural gas, both of which Pickens claims is abundant in our backyard. Pickens calls the US "The Saudi Arabia of Wind Power" and bases that statement on the fact that studies from around the world show that the Great Plains states are home to the greatest wind energy potential in the world, with North Dakota having the potential to power more than a quarter of the country. Will wind power be to North Dakota what oil has been to Dubai? Uh, no ... but if Pickens has his way and the government cooperates, wind power barons might just replace the farmers of America. Pickens says his plan won't interfere with farming and grazing, and that could certainly be possible but I can't imagine it will be all that easy logistically.
The 2nd part of the Pickens Plan calls for the use of natural gas as the primary fuel for our transportation needs. According to the California Energy Commission, natural gas greenhouse emissions are 23% lower than diesel and 30% lower than gasoline and according to Pickens comes with a much lower price tag of under $1/gallon in places like Utah and Oklahoma. Unfortunately the infrastructure isn't in place to make this feasible for most people and the $1/gallon is the exception to the rule. I just checked out a map of natural gas fueling stations around Portland, Oregon and the nearest station is a solid hour away out in the boondocks! The price: $2.53 gallon. Not exactly a buck a gallon. If this plan gains a footing (only 150,000 vehicles in US currently use natural gas) expect those prices to come more in line with what we're paying at the pump now.
His natural gas transportation plan just doesn't make much sense to me in terms of cost and environmental impact, but we have to remember that Pickens is a businessman first and the added benefit to the environment would just be icing on the cake. He did tell the Guardian in April "Don't get the idea that I've turned green. My business is making money and I think this is going to make a lot of money" (referring to his wind power investments). There's also the bit about him not putting any wind turbines on his 68,000 acre ranch but preferring to pay royalties to other Texas ranchers (a farmer who gives up a quarter of an acre to a wind farm can earn $10,000 a year from it – some 3 per cent of the value of the electricity it produces. If he planted corn for ethanol he would earn $300). Kids, pack your bags, we're moving to Sweetwater Texas to build a windfarm!
I still think that electric cars or a hybrid/electric is the best approach, but many think that electric cars are a bit of a pipe dream and that the battery technology will never allow for 100% electric cars, but this is where the research money should go. Is natural gas a better approach? In my opinion, converting infrastructure for natural gas fueling stations is a BIG mistake. The plan is to harness the power of the wind to generate electricity, which frees up the natural gas for our transportation needs, but last time I checked natural gas is still a scarce resource and emissions are ONLY 30% less.. cleaner but far from clean.
At any rate, while the plan has some problems (yeah most plans do) I do applaud Pickens for having a plan rooted in some reality… and it does create discussion, awareness and ideas for change. Long Pickens, short Al Gore.
Now that the rambling out of me is done, let's get into some profitable ideas that may emerge from the Pickens Plan. Focusing on Wind and Natural Gas transportation there are a few that I can think of, but hopefully this post will bring out the creative genius in some of you and yield a few more ideas. Here's my take:
There are few, if any pure wind play opportunities out there. Most of them are overseas, but you're in luck because two Wind ETFs just launched providing diversified exposure to global wind energy companies and I prefer the First Trust Global Wind Energy ETF (FAN). It's only been trading a month and as you can see it's been mostly down. In fact most clean energy funds are down big over the past several months and I think that provides a fantastic opportunity for the patient investor over the long haul. FAN is carving out a large base currently and I'm waiting for it to continue carving out a bottom, then stage some kind of breakout from a cup or double bottom base, although may add an initial small position if it comes back into the 27 range.
My second trade idea for profiting from the Pickens Plan happens to be on the short side, in Fuel Systems Solutions (FSYS). This is a company that provides the necessary components for a car to run on natural gas, so if the Pickens Plan proliferates, FSYS stands to benefit in a big way. Ah, but there is a problem. Not in the company itself. This is a company that has seen a huge surge in revenue and profit as overseas customers convert their vehicles to the cheaper natural gas fuel. If that trend catches on in the US, expect FSYS to continue to profit big. However, this is a stock that has quadrupled in just a few months and from a technical standpoint, this is a mighty bearish looking double top (full disclosure: yes I am short on this). It's a short right here with a stop above 42.50. If it fills the gap around 20, I'm a believer on the long side in this Pickens Plan play.
The other play in this space is Clean Energy Fuels (CLNE), which happens to be controlled by… you guessed it, Mr. Pickens! See, he really does have a plan and it includes profits. CLNE provides compressed natural gas [CNG] and liquefied natural gas [LNG] for use in vehicles. Where FSYS provides the conversion, CLNE is there with the fuel. Some kind of relationship between the two companies seems likely at some point, but that's for another article.
This is a stock that has run up 40% in the past month right into major resistance (much of that after the Pickens Plan was announced). Wait for the euphoria to wear off and the stock to come back to earth for a longer term play or trade the breakout once it clears the downtrend above 14.
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This article has 50 comments:
A Visible Path To $600 Million In Revenue And $2.40 In EPS
Even Without U.S. Adoption – With the leading market position, a
large number of key OEM and distributor relationships, and a big
macro tailwind, we believe Fuel Systems can become a $600 million
revenue company generating $78+ million of EBITDA and EPS of
roughly $2.40 even without U.S. adoption.
CALIFORNIA BALLOT INITIATIVE COULD BE A CATALYST
In addition to overall favorable macro conditions for alternative fuels, we
think a pending ballot initiative in California could be a significant catalyst
for alternative fueled vehicles and would benefit Fuel Systems. The
California Renewable Energy Clean Alternative Fuel Act will be on the
November 2008 ballot and would invest $5 billion in projects and incentive
programs to promote renewable energy and alternative fueled vehicles. This
initiative would allocate $2.9 billion (58% of the total) to cash incentives for
the purchase alternative fueled vehicles, as detailed in figure 6, and $550
million to develop and qualify alternative fueled vehicles.
Imagine two competing economies. One based on oil, the other on wind. Which do think would have the advantage? I am sick of these lucky billionaire fools who come up with these moronic green schemes to fleece the sheeple. I would have a little more respect for the guy if he was pushing nuclear energy. These globalist shysters have pissed away the wealth of the world and now they want to keep us in poverty forever.
Wind and solar is not connected to commodity markets and we begin to lose control when an independent wind farm or solar array provides energy leaving out the middle man! I would rather see the US continue a strong and lasting military presence in the middle east, secure our oil interests and drill, drill, drill. Oil is the only solution for our energy needs and we need to do what is necessary (even drastic miltary action if required) to secure our energy needs. Even though numerous advanced scientists throughout the world are warning about the ill effects of human activity with the burning of fossil fuels and the renewable supply of solar and wind is relatively inexhaustible, I still feel that we need to supply as much oil to markets as possible and stop funding anything renewable. At this point it is about supply and more supply. Use the military wherever necessary and drill, drill, drill until there is nothing left.
SATC: Solar inverters, no matter what kind of solar panels are made, there going to need inverters and SATC is in on the big projects...still a whisper play
BCON: A cleaner solution to grid back up and stability; again still a whisper play
VRNM: biomass fuel, not from corn or sugar but by products that are normal trashed. Their technology is already being used overseas. Again, a whisper play
So legitimate question to ask, if these are really such great ideas why are these stocks wallowing in the low digits? Answer is we are in a transition phase from old to new technology and it is not clear to many that this transition is going to happen. Similar past transitions in recent memory was the transition from the mainframe to the PC.
So yes, there is no amount of speculation involved here. Do your own research. I would be interested to hear in others ideas on these or other cos.
all power generating solutions take time to put in place. we should not be stupid enough to put all of our eggs in one basket. we should give incentives to all forms of non-hydrocarbon forms of power generation but not to the point where the investor is not sharing the risk of economic success.
Nuclear power is cheap, safe and clean.
I say Use everything because the United States is too big for any one technology. Brazil's oil discovery will destroy the opponents of drilling who believe it takes up to 7 years to bring a field into production. Brazil will show that absent the Environmental regs and Green litigation, such a discovery can produce within 3 years or less.
Drill, drill, drill but meanwhile Buy as much from overseas as you can and stop wasting what resources we still have.
Wake up people - we need to get off foreign oil now. Wind, solar, nuclear, more drilling, wave power....we need it all and we need it now!
By the way, isn't Australia largely road powered by natural gas. You convert your engine and travel 50% or more cheaper. China will run the price of oil much higher, making nat gas a logical in the long run.Pickens is an innovator and he is right. We have to approach self sufficiency from all angles, including nuclear.
- France is almost 100% on nuclear.
- Spain is getting 25% from renewables and will have 30% by 2010.
- Germany went from 5% renewables to 15% renewables in 10 years ahead of schedule. The new target is 27% in the next 10 years.
- Denmark is 20% wind and growing.
We have excellent wind and solar resources and a lot of land and coastline. We need to set a goal and make it happen. Every other developed country is.
www.solarfeeds.com/
That's right...they're going to use the Sahara to supply solar, wind, and geothermal power.
The power source for the electric car has to come from somewhere, presently the power mains for overnight charging, which generally comes from a (coal, LNG, Oil, Nuclear etc) power-plant. The total power consumed also contains transmission line losses, which are not insignificant.
Pollutants are not eliminated, just moved from the point of energy use (the car), to the power-plant.
Likewise the Fuel (gas, diesel, NG)/electric hybrid is just an ingenious method to raise efficiency, where the electric energy portion we get back by scraping up the crumbs left by braking energy, which normally goes to waste as heat.
:P
I agree with B.Pickens, we can't drill our way out of this 50+ year old nightmare... the time to do something about America's Energy crisis/problems is now !!!
I own: SATC, CPST, ZOLT...
your comment regards NG use for heavy transport[16 wheelers] is right on. industry from port haulers to refuse ,delivery and bus/taxi fleets are already well on their way with NG. i agree with your other observations for energy options. your one of the few showing grasp of subject/scope of problem.
AUTHOR--
Pickens[CLNE] tie in with engine function already present. reference Westport Innovations[TSX-WPT, Vanvouver, BC. Westport/Cummins[WCI]. WPTFF-OTC.
if NG approach has question/limits, why FSYS so successful in rest of world. what is different there?
scott
solarfeeds.com
windfeeds.com
With it he has emminent domain for a electric corridor through which he can run his pipeline to Dallas supplied by all the water rights that he has bought up.
Wind is a cover for his water play.
www.prosefights.org/wi...
eid-e- shomah mubarak!
www.prosefights.org/th...
You want LNG on our shores? Prepare for reality, Natural Gas prices would have to go up by about 50% for anyone to consider shipping here. That's Europe only, Asian LNG is in the $17-18 area.
Why do you think Cheniere Energy (LNG) has dropped like a rock. They are losing money hand over fist because they built a facility which sits unused.
1) If everyone plugged in their electric cars, we would have to build A LOT more coal or nuclear powered plants. Since nuclear doesn't seem likely (dumb politicians), and coal is our most abundant resource, we will be burning a lot more coal to fuel those green electric cars.
2) Wind energy is hopeless. Do some research. It would take a wind farm the size of a city to power a city of the same size. Additionally, that city would have lots of power outages when the wind isn't blowing -like 50% of the time.
3) Natural Gas for electricity consumption has been proven to be a bad idea. Once you build the nat gas power plants, you end up jacking up the price of the natural gas you're using b/c of the demand YOU created. A lot of these plants that were built in the 90's are losing money today.
4) Nat gas for transportation will have the same affect. Once you increase the demand for the nat gas, the price will skyrocket and no one will use it.
All of these ideas SOUND good, but they simply wont work. Build a lot of nuclear plants, and increase spending on clean coal technologies b/c COAL is what we will be increasingly using in the near future.
Repealing the Overpowering Trend - via Ultracapacitors and a Chorus Motor
Written by Aaron Bianco
Sunday, 27 July 2008
Conventional vehicles are designed with powerful internal combustion engines (ICE) that are intentionally over-engineered and overpowered to produce large amounts of torque at critical yet infrequent times, usually 10-15 seconds at a time.
An example would be starting from a complete stop to merge onto a highway. HOWEVER, a Series Hybrid, outfitted with the new Chorus Meshcon(tm) motor/drive and using ultracapacitors in the design, allows for reversing this overpowering trend.
By incorporating Chorus Meshcon, which can provide 10x the ‘burst’ torque when powered by an ultracapacitor, a Series Hybrid can compete both in "Price" and "Performance" in the mass market due to the unusual features of this new and unique motor. With these two technologies, a Series Hybrid vehicle can be designed around its ‘average’ power requirement and not it’s ‘burst’ power requirement, while still maintaining performance and achieving a much higher gas mileage.
In a Series Hybrid design, the internal combustion engine does not drive a heavy mechanical transmission, but instead directly produces electrical power with an attached alternator, and the resulting electrical output powers the electric motors and/or charges the battery and capacitor bank. The ‘burst’ torque is provided not from the ICE, but from a special and new type of electric motor, the Chorus(R) motor that is making its way from the Aerospace industry to the automotive industry, and will allow Series Hybrids to realize significant gas mileage gains.
So how can a Series Hybrid get much better mileage if it still uses an old-fashioned internal combustion engine to generate electricity? The answer lies in the difference between the *average* power draw of a vehicle, and the *burst* power requirement that is the standard for determining vehicle performance; and Chorus Meshcon shines in this ‘burst’ torque area by uniquely providing up to 10x the standard torque for that burst that would normally come from an overpowered ICE engine in a standard vehicle. .
An internal combustion engine vehicle is sized for its *maximum* power production -- think of top-end hp and torque numbers. Those top numbers represent the "oomph" the car depends on for those brief seconds of maximum (or ‘burst’ torque) acceleration. Carmakers are aware that customers want to have a car that is fast off the mark for merging into highway traffic and other situations, and are wary of downsizing the engine and making a car's performance anemic despite efficiency gains. They’ve learned this painfully from the hostile reviews to very inexpensive, and underpowered cars like some of the old (and >40mpg) Honda Civics, or the Geo Metro. Therefore standard ICE vehicle engines have to be made for that "burst" requirement.
If a typical sedan requires perhaps 25-35 kW of power, but in order to gain market acceptance it needs to apply 4-6 times that power (150kW or more) for a several seconds at a time, then the ICE has to be over-engineered, heavier, and more expensive. Additional efficiency is lost since every ICE has a particular speed where it is most efficient, and this overpowered engine is constantly shifting its rpm which occasionally takes it out of that maximum efficiency zone, which results in poorer gas mileage.
From a mileage perspective, a *small* gasoline or diesel motor can give superb performance, as long as excess energy for that ‘burst’ requirement is stored in a battery or capacitor. A Series Hybrid’s ICE motor would be optimized and tuned for a limited speed and power range, which gives better efficiency (and lower emissions) than today’s automotive engines that have to operate from 500 to 5000 rpm. Therefore a smaller motor, sized like the 50-60hp of a Geo Metro, would easily generate 40+ mpg, yet still throw a medium or large car around with impunity using the ‘burst’ torque from Chorus Meshcon (where the extra power is not drawn from the batteries but rather from the Ultracapacitors) and from the weight savings (from the reduced engineering complexity) that Chorus provides any hybrid vehicle.
The Series Hybrid car approach is fundamentally correct in terms of the powertrain. In comparison, insisting on the "plug-in" approach that requires batteries that do not exist (and if they did would not be affordable) represents numerous limitations, including infrastructure changes and recharge time, plus those additional batteries add hundreds of pounds of extra weight. GM admits that the Volt is likely to top a sticker price of $45k -- and a lot of that is the battery. However, a Series Hybrid could have a ‘plug in’ port, but it is unlikely that all consumers would take advantage of this feature when they finally got home from a long trip. Furthermore, a Series Hybrid with its smaller batteries requires much less ‘filling up’ when you plug it in; you wouldn’t "need" a 4 hour recharge as the ICE could do it for you if you didn’t want to plug it in or no power source was available.
The Series Hybrid approach works, and works well; eliminating the mechanical drivetrain has sizable benefits, while optimizing an engine for a narrow speed and power range instead of designing an engine that needs to work well from 500 to 5000 rpm means that efficiency (and mileage) can indeed be excellent without compromising performance.
But why specifically Chorus Meschon paired with an Ultracapacitor, instead of any other electric motor? Except for Chorus Meshcon, the state of the art electric motors are of two types. The first type is permanent magnet (also called DC Brushless) designs that are super efficient and very elegant. The problem, as Oak Ridge National Labs discovered when reverse engineering the Prius, is that these motors fail at elevated temperatures, and so cannot be relied upon to work all the time. That is why Toyota and others use "parallel" or "dual" hybrid designs that keep the mechanical drivetrain, and the mechanical linkage from the engine to the wheels.
GM, like Tesla, uses the second type, 3-phase AC induction motors that do not have the same thermal limitations as permanent magnet motors -- but they are oversized because the overload performance requires a larger, heavier, and far more expensive motor and drive electronics. This is where the multi-phase AC induction motor called the Chorus Motor steps in to bridge the gap between the features of both of the other two motors, combining their strengths, but having none of the individual weaknesses that each has.
Up to this point, there has been no electric motor technology that met both the size and heat requirements of automobiles. And short term torque requirements have been the underlying cornerstone for designing the powertrain, which has limited the efficiency and the mileage of standard vehicles. Therefore the next design to hit the mass market and compete in both performance and price will be a Series Hybrid with a Chorus Electric motor and an ultracapacitor (for supplying the higher current needed for the short and occasional ‘burst’ torque) and an average mileage that will fulfill the dream of planners for the past 25 years.
Written by Aaron Bianco - ChorusCars.com
Readers have left 4 comments.
No.1 If Ford could do this
Would really like to see Ford do this. Though I guess they will be busy importing cars from their Europe operation.
ford worker (Unregistered) • 2008-07-28 12:22:01 No.2 If Ford could do it...
I think that Ford and ther other big 3 auto makers need to think about something like this. I dont know the Chorus technology.. but it looks good - even better when using something like an ultracapacitor with it. It's only a matter of time now - as the big 3's days are truly numbered.
Guest (Unregistered) • 2008-07-28 20:50:00 No.3 More nimble company could do it
A smaller company could do this because they would be more nimble. The big 6 auto companies are ocean liners that cannot turn that fast.
Guest (Unregistered) • 2008-07-29 12:31:26 No.4 Untitled
I agree with all the comments above. It is sad that a country that could get so motivated back in the space race days can't come to the plate and blow the world away with an innovative and efficient design. I own both a Saturn Vue and Toyota Camry Hybrid. The technology in the Toyota makes the Saturn look like a child designed it. I get excited when I read about what could be but realize there is too much tied up in oil when it comes to any support by our government. I truly hope I get to see some of this in real application in my lifetime.
Guest (Unregistered) • 2008-07-30 07:45:00
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Cargo containers are put on railrcars all the time; so are cargo trailers; so both can run on electrified rails (if the rails were electrified).
In Switzerland, they put "Greyhound" busses filled with people on electrified rail cars for express transport over longer distances than local traffic - they drive on, drive off; call them ELECTRIFIED RAIL FERRIES!!!!!!!!! DUH, we are dumb in the US (actually, we have a drill, drill, drill problem!!!!!!)
GET REAL! This world was made by people with MONEY.
I would also reckon that he is an EXPERT in this situation. A lot of criticism from many jealous sounding people out there who have no plan of their own.
Let us remember and not forget that this plan is mostly about being independant from foreign energy supplies and not to save the enviroment or make things cheap again. This country has been living a party for too long with our pipedreams of excessive living...bling, bling. Wars being fought in the world today are largely being waged because of positioning for future oil needs. Independence for this country is our key to a stable and secure future.
Whether Republican or Democrat President, this Nation did NOT really wish to eliminate the use of crude in Transportation; not even wean!: evidence Detroits SUV's regardless of mileage standards, etc.
Real evidence of true, effective, serious energy LEADERSHIP (ie., strategies and actions to actually reduce crude consumption thru elimination via alternatives) is France (nuclear), Brazil (biofuels), Germany, China & Spain (solar and wind), Switzerland (electrified rails), Europe in general (small cars, EV's and rail transport of people and goods), etc. That's good determined LEADERSHIP. And, yes, we also had our determined leadership: drill, drill, drill, THERE, AND DO NOTHING BIG AND SERIOUS ABOUT PUSHING REAL AVAILABLE ALTERNATIVES TO ELIMINATE THE ADDICTION: we have fed the drug user be it real drugs, illegal drugs, tobacco, oil ...... WE HAVE STOPPED NONE OF THESE THINGS WE SAY WE ARE REALLY AGAINST. JUST LIKE WE HAVE NOT BUILT THE FENCE.
I just dont believe that any source of energy will come from anywhere except from people, who, oh my God...want to make money.
This will work if the government provides the subsidies to retrofit the current vehicles and the price of Natural is maintained at a significantly lower cost than gasoline no matter what the old companies say, even if the government has to regulate it.
US and Foreign manufactures are already building new cars with the CNG option in Thailand. This would be a easy retool of assembly lines and would apply to car, trucks and buses.
Whats not to like?
To everyone that thinks electric cars are the way to go... 50% of the US electricity is powered by COAL. Its dirty coal, and there is no viable way to make it "clean" as of this day. Scientists are as close to making coal clean as they are to making a personal flying jetpack.
See the Blueprint for U.S. Energy Security at:
www.setamericafree.org...
And read the proposal at Scientific American.
A Solar Grand Plan
www.sciam.com/article....
When considering the $400 bilion total in public money to be spent over 30-40 years in the SciAm proposal, keep in mind that we now give over $80 billion annually to oil companies in tax credits and subsidies. And McCain wants to give oil companies $4 billion more. But Republicans are blocking $6 billion for solar wind and geothermal, etc. combined! In other words for one eight of what the oil companies now get, we could have a grid with 69% solar energy by 2050 from solar power plants in the southwest, not even counting the distributed energy from solar PV all over the country.
Floyd Brown at Investment U says Pickens has a history of being in the right place and the right time and profiting handsomely. Floyd has picked four stocks to help you follow Pickens’ lead into natural gas and wind energy…
www.contrarianprofits....
J. Gramer - Rocks Stox, Stalks Rocks.