The New formula for Hybrid School Bus Success

Written by Brian Hicks
Posted August 31, 2005

Dear reader:

Back in 1997, when Mike Schaefer first predicted oil hitting $71 a barrel by the end of the summer, admittedly, I was a bit skeptical. Now I'm practically hanging on his every word.

And when I read the news this morning about the White House releasing oil from the reserves, I was even further convinced that Mike's predictions have never been more on point. Because the bottom line is this - as oil prices continue to go up, so do Mike's stocks.

But this is the Green Chip Review - and Mike doesn't need me touting his success. So I'll tout mine! Because Mike's stocks aren't the only ones benefiting from the rising price of oil.

Listen, I hate paying $2.70 for a gallon of regular unleaded. And I know those of you in places like New York, California and Hawaii are being hit even harder.

But I'd be lying if I didn't say that I'm taking great pleasure in the simple fact that as oil prices increase - the renewable energy sector becomes even further validated. And that can only mean good things for the long-term potential of my renewable energy picks.

Need Help Buying Canadian Stocks?

Contact Mike Bruin @ Canaccord Capital Corp.USA Inc.

Phone 1-800-663-8061- ext. 7438 --USA

Direct Phone (604) 643-7438

In fact, one of the geothermal companies I'm currently recommending just hit a new record high today - up 41.75 percent since early May!

And it's only the beginning.

By the end of the year, I predict this company will be up at least another 40 percent. And that's not even taking into consideration any further natural or 'man-made' disasters.

Just by riding the coattails of the continuing upward trend of oil prices - which you know better than anyone isn't going away anytime soon, this geothermal company, as well as two other renewable energy companies currently in the Green Chip portfolio are only going to become more valuable…and more profitable for Green Chip investors.

You can read more about this company in my Green Chip special report, "11 Green Chip Stocks for 2005."

The new formula for hybrid school bus success... $0.01 = $120,000

Another renewable energy market that's obviously benefiting from out-of-control oil prices is the hybrid market.

Last week I showed you how the high cost of diesel fuel used for school buses is squeezing the already fragile operational budgets of U.S. school systems. That's when diesel was going for $2.61 a gallon.

When I passed by the gas station this morning, diesel was $2.65 a gallon.

Three days into the school year - and diesel prices are already up $0.04!

Now I know that may not seem like a lot.

But when it comes to operating a fleet of hundreds or thousands of school buses - the cost difference is astronomical.

Take for instance the public school system in South Carolina, which buys more than 12 million gallons of diesel fuel each year for its 5,000 buses.

Now school systems buy their fuel in bulk and are exempt from state and federal sales tax. So technically, they are not spending the same price for diesel that you and I see at the pumps.

But that's of little comfort to the South Carolina school district.

Currently, the department pays $1.94 per gallon. But each time the fuel rate goes up a penny, it costs the state approximately $120,000.

Now I don't know when the South Carolina school districts last ordered fuel. But if you were to add just the $0.04 increase that diesel prices saw in the last week - the South Carolina school districts just tacked on an extra $480,000 to their fuel costs!

And you know that the price of diesel isn't going back down.

By the time school districts need to re-order their fuel supplies, you can be certain that they're going to be looking high and low to find alternatives to diesel-guzzling conventional school buses getting between 5 to 7 miles to the gallon.

And the most promising alternative right now seems to be hybrid school buses.

Currently, there are a couple of hybrid companies looking to cash in.

One company in particular, Azure dynamics (AZD.TO) a hybrid commercial and military vehicles company based out of Canada has co-developed with the U.S.D.O.T., a hybrid-electric version of Blue Bird's popular "All American" model school bus.

Operating in hybrid mode, the "All American" can travel hundreds of miles between fill-ups of its diesel fuel tank. Operating in its "pure electric" zero-emission mode, the bus can travel up to 60 miles on one charge of its lead acid battery pack.

Azure claims that its hybrid school bus can nearly double the fuel economy of a conventional diesel bus-and out accelerate it as well.

The hybrid model offers a maximum speed of 55 mph, uses 29% less energy than a conventional ICE-powered school bus and produces 59% lower emissions of nitrogen oxides (NOx), hydrocarbons (HC) and carbon monoxide (CO) - a real selling point for local communities all over the U.S. and Canada which are trying to lower harmful diesel emissions from school buses through local and state legislation.

California even initiated its own 'Clean School Bus Program' which provides funds for school districts to replace aging buses with cleaner alternatives.

As you would imagine LOHAS consumers have long been proponents of hybrid and alternative fuel school buses.

That's no surprising revelation.

But the important thing to understand here... as a Green Chip Investor, is that the LOHAS community, because of its massive collective influence has managed to directly impact the largest mass transit program in the U.S. - the U.S. school bus system.

In fact, this year the National Clean School Bus Grant Program was signed into law - two separate times as part of both the transportation bill and energy bill.

These bills will fund a $55 million school bus retrofit and replacement program.

Don't get me wrong. I'm not saying that there are a bunch of politicians getting all warm and fuzzy over clean air.

But the fact is, the U.S. must decrease its dependence on foreign oil. And since there are tens of thousands of school buses that are ready to be retired - what better time for these school systems - armed with federal grant money, a real solution to decreasing their dependence on expensive diesel and a PR 'clean air' goldmine, to start investing in a cleaner and more economical hybrid school bus fleet?

Over the next ten years, school bus manufacturers are going to have no choice but to offer alternate fuel school buses.

And once hybrid school buses become more widely recognized as real solutions to offsetting high fuel costs, the demand for hybrid and alternate fuel school buses will be so strong - conventional diesel school buses will undoubtedly become nothing more than showpiece artifacts in antique truck museums.

Until next time...

Jeff Siegel
Editor, Green Chip Stocks