Green and Greed in Las Vegas
Written by Brian Hicks
Posted February 22, 2006
Dear Wealth Daily Reader,
It's 2:45 a.m. in Las Vegas. I'm up a few hundred bucks and still sober. The curvy cocktail waitresses with the plastic smiles and twinkles in their eyes didn't miss a beat. My Jack and Coke-filled highball never went dry. And if it weren't for the fact that I had to e-mail today's Green Chip Review back to Baltimore, chances are I'd still be downstairs in the casino - making the most out of my last night here in Sin City.
Not that I'm complaining. The fact is, the only reason I'm even in Vegas right now is because the publisher of Wealth Daily sent me here.
You see, this week the Renewable Fuels Association (RFA) is holding its National Ethanol Conference. And with the ethanol industry maintaining such an integral role in fossil fuel reduction and national security, there was no chance of Wealth Daily and the Green Chip Review missing out on this one.
Especially considering the line-up that the RFA had in store.
We're talking about a 'who's who' of energy experts, public officials and some of capitalism's finest.
Hell, just between 9:30 and 11:45 yesterday morning, the podium was shared by U.S. Representative, Stephanie Herseth, Peak Oil expert and author, Paul Roberts, EPA Administrator, Steve Johnson and U.S. Senator, Tim Johnson, who by the way, was integral to the passage of the Renewable Fuels Standard.
And by the time lunch rolled around, of all people, Dan Nelson, of Exxon Mobil, addressed the crowd of ethanol producers, agricultural leaders and renewable energy advocates.
Telling the audience of ethanol advocates that "WE" are in the energy business (meaning the oil industry and the ethanol industry). There was never a clearer indicator that while big oil still runs the show - the velvet rope has been moved for ethanol. And it's definitely bringing more than just 'talk' to the party.
Last year, 95 ethanol refineries were in production, 14 began operation, 30 began construction, 10 were expanded and more than 4 billion gallons of fuel were produced. Ethanol also lowered consumer gasoline by about $0.08 per gallon and reduced gas emissions by 8 million tons (the equivalent of taking more than 1 million cars off the road).
Meet the guy with all the right answers
After lunch, I headed to the media room for an informal press conference. Much like other renewable conferences, these rooms rarely contain even interns from the mainstream media. But I prefer it that way, as their absence consistently allows us a head-start.
Regardless, by 2 o'clock I was sitting within 5 feet of economist, Dr. John Urbanchuk.
Now while that name may not ring a bell for you, let me assure you - Dr. Urbanchuk's research into the economics of ethanol is about as important as it can get.
You see, there's no doubt that fossil fuel reduction and national security are 'hot buttons' for renewable energy advocates. But it's the economics of these renewable energies that validate the marketplace. Why else do you think we've been able to make so much money in these markets over the past two years?
And certainly, the ethanol industry is proving that its economic contribution - not happy thoughts, is what's pushing it to new heights.
Take a look at what Dr. Urbanchuk found:
The combination of spending for annual operations and capital spending for new plants under construction added $32.2 billion of gross output to the American Economy in 2005. (Generally, Gross Output is larger than GDP since it includes the value of intermediate goods and services, which are 'netted out' of GDP. Taking into account this difference, the ethanol industry added $17.7 billion to the nation's GDP in 2005.)
The increase in gross output (final demand) resulting from ongoing production and construction of new capacity supports the creation of 153,725 jobs in all sectors of the economy this year - including more than 19,000 in the country's manufacturing sector.
Because increased economic activity and new jobs result in higher levels of income for U.S. households, the production of ethanol will put an additional $5.7 billion into the pockets of American consumers this year.
The full impact of the annual operations of the ethanol industry and spending for new construction will add more than $1.9 billion of tax revenue for the Federal government and close to $1.6 billion for State and Local governments.
According to the Energy Information Administration, imports account for 65% of our crude oil supplies...and oil imports are the largest component of the expanding U.S. trade deficit. The production of 4 billion gallons of ethanol means that the U.S. needed to import 170 million fewer barrels of oil in 2005 - valued at $8.7 billion, to meet the same demand levels.
Of course, investors want to know more than what the industry has done - investors want to know where the industry is going. And that's why I like this study so much.
Dr. Urbanchuk's study takes us nine years into the future - to 2015.
According to Urbanchuk, ethanol demand is expected to increase due to a number of factors...
The oil industry's decision to abandon MTBE
The aggressive production and promotion of flex fuel vehicles by the auto manufacturers
Concerns over gasoline prices and energy security issues related to imported oil
And after a review of public statements and conversations with ethanol industry analysts, plant developers, builders and financiers, Dr. Urbanchuk anticipates that an additional 4.1 billion gallons of new capacity will be added between 2006 and 2015 - most of which will be coming online within the next three years.
Now, much like the industry's economic contribution was clearly identified for 2005 - the same holds true for 2015.
Take a look at what the study found:
The combination of spending for annual operations and capital spending for new capacity will add $83.1 billion (2005 dollars) of gross output to the American Economy by 2015.
The increase in gross output (final demand) resulting from ongoing production and construction of new capacity supports the creation of as many as 203,879 jobs in all sectors of the economy by 2015.
The production of ethanol will put an additional $14.6 billion into the pockets of American consumers in 2015.
With the Energy Information Administration reporting that imports account for 65% of our crude oil supplies, and oil imports maintaining the largest component of the expanding U.S. trade deficit, the production of 9.8 billion gallons of ethanol (2015 projections), will mean that the U.S. will import 3.7 billion fewer barrels of oil between 2005 and 2015. That's $197.4 billion dollars staying in the U.S instead of being shipped elsewhere to pay for foreign oil.
While some of these numbers are more than impressive, Dr. Urbanchuk made a point to let all in the room know that these are conservative estimates. As excited as the industry is these days, you can't blame the man for being cautious.
I'll have more in the weeks to come on the booming ethanol industry. In the meantime, if you'd like to read more about ethanol and other biofuels, visit the free archives section of www.greenchipstocks.com.
Until next time...
Jeff Siegel
Editor, Green Chip Stocks
It's 2:45 a.m. in Las Vegas. I'm up a few hundred bucks and still sober. The curvy cocktail waitresses with the plastic smiles and twinkles in their eyes didn't miss a beat. My Jack and Coke-filled highball never went dry. And if it weren't for the fact that I had to e-mail today's Green Chip Review back to Baltimore, chances are I'd still be downstairs in the casino - making the most out of my last night here in Sin City.
Not that I'm complaining. The fact is, the only reason I'm even in Vegas right now is because the publisher of Wealth Daily sent me here.
You see, this week the Renewable Fuels Association (RFA) is holding its National Ethanol Conference. And with the ethanol industry maintaining such an integral role in fossil fuel reduction and national security, there was no chance of Wealth Daily and the Green Chip Review missing out on this one.
Especially considering the line-up that the RFA had in store.
We're talking about a 'who's who' of energy experts, public officials and some of capitalism's finest.
Hell, just between 9:30 and 11:45 yesterday morning, the podium was shared by U.S. Representative, Stephanie Herseth, Peak Oil expert and author, Paul Roberts, EPA Administrator, Steve Johnson and U.S. Senator, Tim Johnson, who by the way, was integral to the passage of the Renewable Fuels Standard.
And by the time lunch rolled around, of all people, Dan Nelson, of Exxon Mobil, addressed the crowd of ethanol producers, agricultural leaders and renewable energy advocates.
Telling the audience of ethanol advocates that "WE" are in the energy business (meaning the oil industry and the ethanol industry). There was never a clearer indicator that while big oil still runs the show - the velvet rope has been moved for ethanol. And it's definitely bringing more than just 'talk' to the party.
Last year, 95 ethanol refineries were in production, 14 began operation, 30 began construction, 10 were expanded and more than 4 billion gallons of fuel were produced. Ethanol also lowered consumer gasoline by about $0.08 per gallon and reduced gas emissions by 8 million tons (the equivalent of taking more than 1 million cars off the road).
Meet the guy with all the right answers
After lunch, I headed to the media room for an informal press conference. Much like other renewable conferences, these rooms rarely contain even interns from the mainstream media. But I prefer it that way, as their absence consistently allows us a head-start.
Regardless, by 2 o'clock I was sitting within 5 feet of economist, Dr. John Urbanchuk.
Now while that name may not ring a bell for you, let me assure you - Dr. Urbanchuk's research into the economics of ethanol is about as important as it can get.
You see, there's no doubt that fossil fuel reduction and national security are 'hot buttons' for renewable energy advocates. But it's the economics of these renewable energies that validate the marketplace. Why else do you think we've been able to make so much money in these markets over the past two years?
And certainly, the ethanol industry is proving that its economic contribution - not happy thoughts, is what's pushing it to new heights.
Take a look at what Dr. Urbanchuk found:
The combination of spending for annual operations and capital spending for new plants under construction added $32.2 billion of gross output to the American Economy in 2005. (Generally, Gross Output is larger than GDP since it includes the value of intermediate goods and services, which are 'netted out' of GDP. Taking into account this difference, the ethanol industry added $17.7 billion to the nation's GDP in 2005.)
The increase in gross output (final demand) resulting from ongoing production and construction of new capacity supports the creation of 153,725 jobs in all sectors of the economy this year - including more than 19,000 in the country's manufacturing sector.
Because increased economic activity and new jobs result in higher levels of income for U.S. households, the production of ethanol will put an additional $5.7 billion into the pockets of American consumers this year.
The full impact of the annual operations of the ethanol industry and spending for new construction will add more than $1.9 billion of tax revenue for the Federal government and close to $1.6 billion for State and Local governments.
According to the Energy Information Administration, imports account for 65% of our crude oil supplies...and oil imports are the largest component of the expanding U.S. trade deficit. The production of 4 billion gallons of ethanol means that the U.S. needed to import 170 million fewer barrels of oil in 2005 - valued at $8.7 billion, to meet the same demand levels.
Of course, investors want to know more than what the industry has done - investors want to know where the industry is going. And that's why I like this study so much.
Dr. Urbanchuk's study takes us nine years into the future - to 2015.
According to Urbanchuk, ethanol demand is expected to increase due to a number of factors...
The oil industry's decision to abandon MTBE
The aggressive production and promotion of flex fuel vehicles by the auto manufacturers
Concerns over gasoline prices and energy security issues related to imported oil
And after a review of public statements and conversations with ethanol industry analysts, plant developers, builders and financiers, Dr. Urbanchuk anticipates that an additional 4.1 billion gallons of new capacity will be added between 2006 and 2015 - most of which will be coming online within the next three years.
Now, much like the industry's economic contribution was clearly identified for 2005 - the same holds true for 2015.
Take a look at what the study found:
The combination of spending for annual operations and capital spending for new capacity will add $83.1 billion (2005 dollars) of gross output to the American Economy by 2015.
The increase in gross output (final demand) resulting from ongoing production and construction of new capacity supports the creation of as many as 203,879 jobs in all sectors of the economy by 2015.
The production of ethanol will put an additional $14.6 billion into the pockets of American consumers in 2015.
With the Energy Information Administration reporting that imports account for 65% of our crude oil supplies, and oil imports maintaining the largest component of the expanding U.S. trade deficit, the production of 9.8 billion gallons of ethanol (2015 projections), will mean that the U.S. will import 3.7 billion fewer barrels of oil between 2005 and 2015. That's $197.4 billion dollars staying in the U.S instead of being shipped elsewhere to pay for foreign oil.
While some of these numbers are more than impressive, Dr. Urbanchuk made a point to let all in the room know that these are conservative estimates. As excited as the industry is these days, you can't blame the man for being cautious.
I'll have more in the weeks to come on the booming ethanol industry. In the meantime, if you'd like to read more about ethanol and other biofuels, visit the free archives section of www.greenchipstocks.com.
Until next time...
Jeff Siegel
Editor, Green Chip Stocks
