Forget Raising Taxes...

Written by Brian Hicks
Posted August 24, 2005

Dear Wealth Daily reader:

How hybrid technology could actually be the solution to saving our public school systems from financial ruin!

The headlines were screaming about power outages in Iraq on Monday morning. The loss of electricity crippled the operations of oil terminals, thereby causing a loss of 455,000 barrels of oil at a cost of nearly $30 million in seven hours.

$30 million – in seven hours!!!

I imagine nearly every single hard-working American commuter that knew about this story was infuriated. Especially when shelling out $2.65 a gallon in the morning, hoping to beat the $0.03 to $0.05 increase by the end of the day.

Of course, by lunchtime this particular story had practically disappeared...with follow-ups and analyses few and far between. (I suppose the news of a judge signing divorce papers for Jennifer Aniston and Brad Pitt took precedence.)

Nonetheless, while you can’t help but to inadvertently register gas prices on your drive home, checking to see if there’s a competing gas station running even the tiniest discount, U.S. companies and government organizations are frantically trying to figure out new ways to cut their energy costs – just in an effort to maintain daily operations.

Take for instance the school districts in Long Island, NY.

Already pressured by tight budgets, Long Island school districts are sweating bullets as out-of-control oil diesel prices could add millions to their transportation costs.

With only a $7 million budget for bussing this year, increased transportation costs could actually force the district to cut programs in January.

Yeah, that’s exactly what our struggling school systems need – more budget cuts!

Though not to sound unsympathetic, these kinds of transportation budget crises also present a window of opportunity for Green Chip investors – especially those who follow industrial hybrid technology companies.

Now I’ve already written about industrial hybrids in previous issues of the Green Chip Review because this is a segment of the hybrid market that is often overlooked. Which is unfortunate, because the potential of this market is massive! (These articles have been archived at

Hybrid school busses represent a perfect example.

According to a study conducted by School Transportation News, during the 2003-2004 school year, school bus manufacturers built 41,649 school buses. The average cost based on 2003 estimates ranged from $50,000 to $62,000 per bus.

So even at the low-end of those estimated costs, you’re looking at more than $2 billion worth of conventional, diesel-guzzling school buses!

Now I’m not saying that school districts all over the U.S. are going to start putting in orders for hybrid school buses tomorrow. In fact, demand for alternate fuel school buses wasn’t too impressive in 2004 with only 290 manufactured in total.

Of course, diesel was running at a massive discount compared to today’s prices when those orders were placed too.

But as the price for diesel continues to rise, U.S. school system officials are going to have no choice but to seek alternatives to a bussing system that will inevitably become too costly for their already overstretched operating budgets.

Could hybrid school buses be a possible solution?

It's entirely possible.

U.S. mass transit systems are now utilizing hybrid buses in some of the nation’s largest cities – and the results for these systems, while still relatively early, seem to indicate a significant savings.

These particular hybrid buses (manufactured by General Motors), which deliver 60 percent greater fuel economy than conventional transit buses could save more than 40 million gallons of fuel a year with the replacement of only 13,000 transit buses in America’s nine largest cities.

And while marketers continue to push their emissions reduction agenda to the public (these hybrid buses do actually reduce certain emissions up to 90%) – the fuel savings represent the real catalyst for continued replacement of conventional transit buses.

Based on a price tag of $2.60 per gallon of fuel, with a total of 13,000 buses representing a 40 million gallon decrease in fuel demand, you’re looking at an annual savings of more than $100 million.

Now if U.S. school systems were able to replace only 13,000 of their fleet with these types of hybrid buses, not only would they be able to maintain their bussing systems without going over budget – but some could even come out ahead...with a surplus! Imagine that!

Next week I’ll introduce you to a couple of companies that specialize in hybrid bus technology. And one of these companies already works directly with one of the country’s largest school bus manufacturers.

Until then...

Jeff Siegel
Editor, Green Chip Stocks