CNNMoney had a piece on “are we in an oil bubble” which polled a bunch of analysts about oil prices (unscientifcally) - comparing the price of oil to the tech stock and housing price bubbles.  What stuck out at me is that optimists amongst the analysts quoted (from the consumer’s point of view those would be the ones who believe we are indeed in a bubble that is due to pop) felt that oil might go back to $100 a barrel - and that $70 or $80 dollar a barrel oil was off the table. 

What does this mean?  First off, investors should take anything analysts say with a grain of salt - aside from some seen as “outlyers” - its not like they were predicting $100 oil even a year ago.  I think its almost impossible to get much more than a hand grenade or horseshoe’s level of accuracy (if that) when predicting prices of something as complex as oil (parsing out demand, supply, the weather, government policy, global events… its impossible).

Odds are that there is some speculative pressure in the market from commodities traders.  Supply is drawn very tight, there is a ton of excess capital not being invested in real estate, commodities are going through the roof and so excess capital chasing oil is having a big effect on oil prices at the margin.

That said, it was only October when oil broke the $70 level, so I think we have yet to really …

Cnet’s Green Tech Blog has a post I missed a few days back about a Iowa State University study claiming that Ethanol has had a big impact on lowering gas prices for consumers. Is ethanol lowering prices at the pump for consumers? It cites a study done by Iowa State University (pdf link) that shows that ethanol has lowered pump prices between $0.29 and $0.40 per gallon. The post also then states:

I find their $0.29 to $0.40 per gallon results a surprisingly large number, indicating that ethanol production, while providing on average well less than 5% of our gasoline supplies over their study period, could have affected prices at the pump downward to the tune of greater than 2 to 3 times that percentage level. That result is a huge win for ethanol proponents, as it suggests that adding ethanol to the US fleet has significantly benefited consumers (as one would expect), and also suggests that the ethanol subsidy program (at about $0.40 per gallon for 5% of the US gasoline production works out to around a 1 to 2 cent effective tax on gasoline at current levels) may well have paid for itself up to 20x over or more.

Taking aside the contentious issue of net petroleum usage in the production of corn ethanol, the above statement about the beauty of corn ethanol and the value of our subsidy of that industry is flat out ridiculous as it ignores the true economic costs to get that $0.40 …

Daily Green Investing Round-up
Nissan and NEC Invest $115M in Lithium Ion batteries; Carbon Trading Exec Explains that Carbon Markets Work; $30MM Raised for GeoThermal; Spanish Renewables Company Planning to Invest $8B in US.

Nissan and NEC are investing $115M in a Li-ion battery manufacturer JV with the catchy but functional name Automotive Energy Supply Corporation (AESC). This company will focus on building large format Li-ion batteries for… well, automotive applications. It is part of Nissan’s push to leapfrog Toyota and Honda in the race to roll out the next generation of vehicles in electric/hybrid market. Renault has already agreed to use AESC batteries in one of their electric car projects. via Wired

CNET Contributor, and Cleantech Blog founder, Neal Dikeman interviews Marc Stuart, one of the founders of EcoSecurities plc - a carbon credit generation and trading firm, to explain the U.S. carbon trading market. It does get a bit jargony for the unitiated, but there is some good info in here for those that don’t know carbon trading that well, or particularly the U.S. carbon trading market. via Cnet’s Greentech Blog

EnLink Geoenergy raises $30M for geothermal heat pump installations. VentureBeat is reporting that Houston, Texas-based EnLink Geoenergy Services has raised $30MM for continued development of its heat pump technology from Craton Equity Partners and Medley Partners LP. This is interesting because EnLink claims a …

I have been reading up a bit on the potential of Algae BioDiesel. For those of you not familar with Algae and its potential as a biofuel - this Popular Mechanics article has many of the basics. It’s a technology still in its infancy, but provided some of the challenges of refining and consistent production can be worked out, it has some promise compared to other potential Bio-Fuels - including Bio-Diesels from Soy, Switch Grass or Sugar Cane or Corn Ethanol - particularly from an land efficiency standpoint.

Bio-fuels are seen as an potential next step toward renewable transport by many because they could slot nicely into much of the existing petro-infrastructure with less of a leap than electric or hydrogen - from cars design and manufacture, down to fuel distribution. For instance, (for better or worse) ethanol is alread highly integrated into our fuel food chain at this point - being blended with gasoline.

However, there are some significant hurdles for these fuels to actually make a dent in our oil consumption pattern. To date ethanol has been primarily corn-based and generally inefficient to produce from a oil consumption basis e.g., (ethanol’s need for more than a gallon of oil to produce a gallon of ethanol). Bio diesel similarly suffers from the challenges and expense of moving lots of feed stock from where they grow well to where it makes sense to refine those …

Does anyone know of any good studies on the impact that socially responsible investing (SRI) has had on “green stock” valuations?

One of the things that I find investing on the public market side is finding mismatches between the value of a company and the price that Wall Street is paying for that company at any point in time - you know stock analysis 101 as preached by Ben Graham, Warren Buffet and their disciples. Well…. to say that I do what Graham or Buffet does would be a misnomer - I have my own methodologies which are a bit more about percieved valuations - but that’s a post for a different day.

What is unique about green stocks, however, is this concept of SRI - people assigning value to a firm and investment that is not driven by the profit motive. Nobody invests in technology companies based on an intrinsic value similar to saving the planet - well at least not that I am aware of (e.g., would gamers buy the stock of a gaming company to keep it in business so they can make more games for them?)…

I am interested to see if SRI throws traditional valuation metrics out of whack when comparing a “green stock” to a non green stock in terms of pure economic return - financial investment goals…

I came across this today, Vertical Farming, which is pretty cool.

Vertical farms, many stories high, will be situated in the heart of the world’s urban centers. If successfully implemented, they offer the promise of urban renewal, sustainable production of a safe and varied food supply (year-round crop production), and the eventual repair of ecosystems that have been sacrificed for horizontal farming.

This has lots of angles to it, including encouraging higher density urbanism, in-fill potential for decaying inner cities, the retirement of agricultural land for preservation, not to mention the obvious value of having food production close to population centers where there are customers - and more importantly workers. There are some pretty cool and out there architectural studies on the site as well.

I have no idea if the economics work (particularly in high cost real estate markets like NYC or San Francisco) - not to mention what the neighbors might say (500+ acres worth of farm smells in one city block?) - but if we are headed to $8 gas - ideas like this merit some consideration.

It also reminded me of a recent conversation I had with a former analyst of mine about derivative (not financial derivative) plays off of the high cost of oil - trickle down stuff that might have been overlooked by the Street in general.I suggested to look at the agriculture sector to see if …

Since this blog is about green investing and green economy - is it heresy for me to consider that big oil might be a good investment? Taking aside the value of the social responsibility of investing in green (a topic I want to revisit in another post) big oil might be a good investment alongside green from a thematic standpoint.

When I think about trends and investment themes I like to look at them from all sides - winners and losers. I don’t necessarily think it always (or even often) makes sense to invest in both sides of any particular trend (long the winners - short the losers), but I like to consider these angles because it helps me when sector valuations and sentiment swings around - often creating valuation opportunities on the other side of where you started out with an investment thesis. In tech that dichotomy is often spelled out in net sum zero terms - new companies take or make obsolete old companies.

On the topic of the emergence of alternative energy, though, I am pretty sure those rules don’t fit.

Yesterday,towards the end of my post I talked about how I thought that green investing was following a path I observed in Telecom during the 90’s post-dereg days - where one of the biggest - if not the biggest winner of the post-dereg consolidation was old line SBC (now AT&T). …

Fortune’s Green Wombat has out a couple items that I think provide some insight to the challenges and opportunities of green investing with regard to entrenched interests. First is a write up of a networking event sponsored by VentureBeat where Ray Lane of Kleiner Perkins compared green investing to biotech.

Unlike the first dot-com era or even the current Web 2.0 age, there’s no quick exit on the horizon for investments in green tech companies that may be years away from producing a product and require hundreds of millions, if not billions, in project financing to build car factories or solar energy power plants.

Lane compared investing in green tech to the long-term horizon needed for investing in biotech startups, where the key is to hit milestones that allow investors to calculate valuations.

The second was today’s news that Google would be investing $115 Million in start up solar energy company BrightSource.What’s interesting about this is not so much the Google investment - but instead the list of other BrightSource players - BP, StatoilHydro, and Chevron - which illustrate the degree to which we can expect the entrenched players to be active, if not dominate, in this space - and underlines Kane’s point about this not being the same as Internet investing.

There is one point, however, where I differ from Kane on his assessment of investor expectations - and that is the …