Optimistic on Energy - This Time, For A Reason (BLDP, PLUG)

Includes: BLDP, PLUG

The Stalwart submits: The start of the new year has ushered much news that has roiled energy markets: Ariel Sharon's stroke, saber-rattling out of Iran, Russia turning of the natural gas spigot to Ukraine, and of course the tragic death of the West Virginia Coal Miners. (For an excellent article on the challenges in recruiting miners check out this from The Globe and Mail).

What's weird, and it has always been the case, is that none of the news that effects the energy market is actually energy-related. As the reserves of free/democratic nations deplete, and deposits become even more concentrated in unstable regions, we can expect politics to play a growing role in supply and prices. This is precisely the opposite way most other areas of the economy are going, as governments elect to extricate themselves from the market.

Back in 2000, when speculation was rampant in alternative energy shares, it was clearly based on hype. With gas prices below $1.00/gallon there was very little to drive the market. The various listed fuel cell companies (Ballard [BLDP], Plug Power [PLUG], Fuel Cell Energy, DCHT, etc.) had nothing to announce except the occasional $10,000,000 DOE research grant. Now, with oil prices above $60, demand from China growing rapidly, and Putin & the Sheiks exerting increasing control, I'm guessing that all of the increased interested in energy technology will produce something real.

Furthermore, the demand side is changing. Our current energy technology hasn't kept up with the demands of mobility. We may soon be able to store our entire hard drive on a phone, but it won't do much good if everyone at the airport needs to camp out by the electrical sockets in order to send an email (sort of defeats the point of wireless when you need a wire).

So, while it's hard to see how things will unfold, I'm cautiously optimistic this time around.

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