As ExxonMobil (XOM) made clear with both its algae investment and its comments about peak gasoline, and as the Department of Energy further underlines in its new Energy Outlook, the age of the gas-guzzling American motorist has reached its twilight years.

That's not to say we're not going to require a massive amount of oil to power our economy over the next few decades. Continental Resources (CLR) should certainly keep up its efforts to increase domestic crude production. We just aren't likely to meaningfully grow our total gasoline consumption from here.

The buzz on renewable fuel just won't go away.

Brazil uses soybeans and we use corn. Green Plains Renewable Energy (GPRE) states it is North America's fourth largest ethanol producer, operating six ethanol plants in Indiana, Iowa, Nebraska and Tennessee with a combined expected operating capacity of 480 million gallons of ethanol per year. GPRE also operates an independent third-party ethanol marketing service that currently provides marketing services to its affiliated plants as well as three third-party ethanol producers with expected operating capacity of 305 million gallons per year. Green Plains owns 51% of Blendstar, LLC, a Houston-based biofuel terminal operator with six facilities in five states. Green Plains' agribusiness segment operates grain storage facilities and complementary agronomy, feed, and fuel businesses in northern Iowa and southern Minnesota.

Q3 2009 Earnings Call Transcript

November 10, 2009 11:00 am ET

The ethanol division would have been break even except for the start up costs at the last plant it opened. More importantly, ethanol margins have improved in third quarter so far and all plants are operating profitably.

Excluding exit costs from retail, Rex could post its first positive EPS in a year, reversing the trend in losses seen since the beginning of the consumer spending downturn late last summer. Given Rex's substantial asset base (book value $25/share, net corporate level cash of $8.50-$9.50/share), a positive earnings result could help boost the stock modestly as it would help alleviate concerns of eroding value.

Q2 2009 Earnings Call Transcript

August 11, 2009 11:00 am ET

There are several positive events for Rex coming up in the 2H09. First, Rex will have completed its exit from its legacy retail business in 2Q09, freeing up capital and management while putting end to its financial drag. Second, the One Earth Energy ethanol plant Rex is a majority investor in should be up and running by the end of the 2Q09. I believe this plant will add to profits and operating cash flow modestly based on current ethanol and corn prices.

In his opening remarks at the 25th annual, 2009 Fuel Ethanol Workshop, Mike Bryan, the CEO of BBI International called on the attendees to "Take back control of the [fuel ethanol] industry's image."

It's no secret that the ethanol industry is having problems, mostly, in my mind, due to a classic commodity squeeze: the industry has no pricing power either for its inputs (corn and natural gas,) or its products (ethanol, with a price which closely tracks gasoline.) This is why, and Mr. Bryan said, the industry could not get plants financed a year before the financial crisis.

As its name implies, Rex has its roots in the retail industry as a consumer electronics chain in small towns across America. Over the years, competition from Wal-Mart (WMT) and Best Buy (BBY) ate into the company’s sales and profits. Rex began shrinking its store base in 2003 and will have completely exited the retail business in 2Q of this year. Along the way, the company invested in alternative energy projects, including synthetic fuel from coal and, more recently, ethanol plants.

By Jon Kolb

Following a period of optimism in the burgeoning ethanol industry and renewed interest in clean, green renewable energy and energy independence in the U.S., the rapid introduction of new ethanol plants is expected to continue its current phase of bankruptcies and consolidation.

The PV solar power market is intensely competitive and rapidly evolving. The number of solar manufacturers has steadily increased due to the growth of actual and forecast demand for PV products and the relatively low barriers to entry.

Henry Ford was an early 20th-century visionary of alternative fuels, and planned on having his early cars powered by ethanol. In fact, his first Model T could run on gasoline combined with a biofuel alcohol mix. The car's 10 gallon (38 litre) fuel tank was mounted to the frame beneath the front seat; one variant had the carburetor (a Holley Model G) modified to run on ethyl alcohol, to be made at home by the self-reliant farmer.

Today, the global demand for alternative energy biofuels is expanding at almost 20 percent per year through 2012 to over 92 million metric tons, despite recent concerns about the impact of biofuels on the environment versus world food supplies. Market expansion is led by a more than doubling of the global market for bioethanol, with the biodiesel market achieving even more rapid growth. Other biofuels will also achieve double digit gains, though from a smaller base.

Q1 2009 Earnings Call

May 14, 2009 11:00 am ET

Wall Street Analyst Forum's 20th Annual Institutional Investor Conference Transcript

With the crash of the ethanol industry, investors have seen a stunning reversal of a technology that seemed so profitable only a few quarters ago. Dozens of plants have been shuttered, and many more plants on the drawing board or in construction have been axed.

And the way the press spins it, ethanol will never be used again in the United States.

In the span of just one year, ethanol has "gone from panacea to pariah" in the eyes of many investors, the Wall Street Journal reports. Critics blame ethanol for high corn prices, and question whether it really reduces the need for oil and helps the environment. A recent study by the Organization for Economic Cooperation and Development said biofuels, "offer a cure [for oil dependence] that is worse than the disease." Another organization said ethanol bolstered corn-growing could strain water supplies, while the American Lung Association said it's concerned about the biofuel's contribution to air pollution. While ethanol producers such as VeraSun Energy (VSE) and Pacific Ethanol (PEIX) continue to lobby Congress to boost the amount of ethanol refiners are required to mix into gasoline, "what once looked like a slam-dunk" is now far from a given, the Journal says. Other factors driving the share prices of ethanol stocks down include over-production, slipping prices, growing capacity and increasingly angry farmers and food-producers. "Our love affair with ethanol has finally ended because we've taken off the makeup and realized that, lo and behold, it's actually a fuel," Friedman, Billings, Ramsey analyst Kevin Book said recently. The WSJ article follows an earlier Bloomberg report (see summary) raising similar concerns about ethanol demand and supply.

The profitability of ethanol producers has been hit by rising commodity prices and a sharp reduction in the price of ethanol. The price of corn has risen to about $3.80 a bushel on the Chicago Board of Trade from less than $2.50 in September 2006, whereas the price of ethanol has fallen to about $1.86 a gallon versus $4.33 in June 2006. Ethanol production in August, at 10.3 million barrels, was 32% higher than a year earlier. But restrictions by Georgia and Florida on use of ethanol during the summer, when the fuel easily evaporates, cut demand by about 3 billion gallons -- or 45% of current national demand -- according to Friedman, Billings, Ramsey. Despite ethanol plant closures, new mills are expected to come on line next year, raising output to 11.3 billion gallons by year-end. Without a relaxation in fuel regulations by Georgia and Florida, demand is likely to grow slower than supply. David Pimentel, a professor of ecology and agriculture at Cornell, claims that manufacturing ethanol from corn requires 29% more energy than ethanol itself produces. Michael Wang, an environmental engineer at the Argonne National Laboratory outside Chicago, disputes the inclusion of energy spent on making fertilizers and pesticides in the calculation, and therefore estimates that ethanol production results in a 33% gain in combustible energy. According to Ron Oster, a principal at Broadpoint Capital, "Ethanol companies are near breakeven at best; that's not a good recipe when you have $100 oil."

The Future is Cellulosic

It is now widely accepted that the future of ethanol is cellulosic: Rather than distilling corn for ethanol to fuel our cars, accepted wisdom is now that we will be able to replace a large fraction of our current fuel consumption with ethanol distilled from agricultural and forestry waste, as well as dedicated energy crops, such as switchgrass and hybrid poplar. Cellulosic ethanol also has the potential to alleviate the greatest stumbling block of corn ethanol as a potential replacement of gasoline: that there is simply not enough of it. Corn ethanol will only be able to displace a small percentage of total US gas consumption. If the entire current US corn crop were converted into ethanol, it could replace less than 20% of current gasoline consumption. More realistically, the National Renewable Energy Laboratory [NREL] projects that 4% of gasoline could be replaced without overly affecting corn prices..