Ethanol?

I received a newsletter today from an investment advisor I follow.  I’m hoping that someday I’ll have some money to invest… but I digress.  Of course, they were trying to sell me on subscribing to some guy’s newsletter because he had a stock that solved the “ethanol” problem.  What was interesting about this email was the subject matter.  I am NOT recommending any stocks or newsletters here, but I thought I’d pass along this information as it is quite interesting… Ethanol.

It’s the word on everybody’s lips these days and Wall Street has fallen in love with it… But there’s a dirty little ’secret’ about ethanol that no one’s been willing to talk about – a weak link in the supply chain that’ll easily bring its distribution to a crawl… and send its price through the roof!  It all has to do with one critical factor: getting it to the pumps.

Just how difficult can that be…?  What They’re NOT Telling You About Ethanol

Ethanol isn’t quite as simple a solution to our oil problems as some people would have you believe.  Don’t get me wrong… the fuel itself shows a lot of promise. The problem – and a rather serious one at that – lies in its transport. To begin with, ethanol is water soluble. It has a tremendous affinity to absorb water. And because water accumulation is a normal occurrence in pipelines, putting it into a pipeline can be risky, as it could render it unusable as a transportation fuel.

And road transport isn’t much better. While it is far more practical than pipelines, it’s also incredibly expensive. So much so that, by the time ethanol producers got their juice to the pumps, it’d cost you more than the high-priced gas it’s meant to replace!  The only way ethanol is going to succeed is if it can get to the pumps without breaking the bank.  That leaves two viable options: waterway and rail.

Just one thing… In order for producers to ship by water both the ethanol plant AND its customers must be next door to a dock.  Considering most ethanol plants are stuck in the cornfields of the Midwest they’d have a pretty hard time pulling up a barge for loading. Besides, even if they were less than a stone’s throw from water, for many of them it wouldn’t matter. With production volumes of less than 80 million gallons, the costs of marine transport would be far too expensive… it’d be like hiring a semi to move your couch.

Sounds like this alternative fuel may not be the answer to skyrocketing oil prices. Oh well, bite the bullet and ‘fill er up’!