Tag Archives: energy
Should You Buy Farmland? Or Bonds? Or Oil? No!
This story appears in the June 24, 2013 issue of Forbes. Two areas investors should pare back on are bonds and farmland. And regarding energy, be extremely careful. Bonds have been overpriced since 2008, but that doesn’t mean the bubble won’t eventually burst. Debt instruments have already taken a hit as the Federal Reserve hints that it will be scaling back its vacuuming of Treasurys and mortgage-backed bonds. Unless you have to do the bond dance (the only buyers, other than speculators, of long-term government paper are financial institutions that must have such securities for regulatory reasons)–don’t! Municipal bonds are in a different universe from corporates and Treasurys. Here the big risk is solvency. Unless you are an expert or have an advisor who is, go for well-diversified muni-bond funds with durations of under five years. Undermining the integrity of the dollar is similar to introducing a virus into your computer: It corrupts the information. In the economy an unstable dollar undermines the integrity of prices. Hard assets go up when the dollar is weakened, as people seek to preserve what they have. Traditional, productive investments are hurt. In the inflationary 1970s the price of farmland boomed. Same with agricultural commodities. Farmers leveraged to get more and more land. When inflation was conquered in the early 1980s, this Fed-created boom collapsed. Agricultural America went into a depression. A couple of years ago in Nebraska I warned against the rapid rise in the price of farmland since the early 2000s. I was assured that farmers had vivid memories of what had happened in the 1970s and would not overborrow to make purchases. I’m not so sure this is the case today. It certainly isn’t with Wall Street , where institutions and individual investors are treating farmland as a great asset class, and many are borrowing to purchase it. Caveat emptor! Energy also has been given an artificial boost by the shaky dollar for the past decade. Commodity inflation, including oil, has for the moment sharply subsided because the Fed has been sterilizing most of the money it’s been printing by borrowing it back from banks. There’s no way to know how much more of a downside there is, but unless you are farsighted and nimble, you should be extremely cautious with energy investments. If you’re overweighted in energy, cut back for now. To repeat, the Fed may give commodities, bonds and farmland a new round of bubble life, but if you’re a long-term investor, don’t get sucked in. Continue reading
Alchemy — Turning Plants Into Fuel
Sean Nealon, UC Riverside A new book focuses on aqueous processing of cellulosic biomass, which includes wood, grasses, and agricultural and forestry residues, for conversion into fuel A University of California, Riverside professor in the Chemical and Environmental Engineering Department edited a recently published book that provides in-depth information on aqueous processing of cellulosic biomass, which includes wood, grasses, and agricultural and forestry residues, for conversion into fuels. Charles Wyman, who also holds the Ford Motor Company Chair in Environmental Engineering in the Center for Environmental Research and Technology (CE-CERT) of the UC Riverside Bourns College of Engineering, led the development of the book “ Aqueous Pretreatment of Plant Biomass for Biological and Chemical Conversion to Fuels and Chemicals .” The book, published by John Wiley & Sons, contains 23 chapters written by experts from throughout the country. Charles Wyman’s passion for renewable energy was first expressed through a junior high school science fair project focused on solar energy storage. It grew as he earned a Ph.D. in chemical engineering at Princeton, became a leader in biomass conversion at the Solar Energy Research Institute, now known as the National Renewable Energy Laboratory, and as an endowed professor at Dartmouth College. In 1996, during his tenure at National Renewable Energy Laboratory, he edited the book Handbook on Bioethanol: Production and Utilization. He also co-founded Mascoma Corporation, a startup company focused on advanced technology for biomass conversion to ethanol, in 2005. The just-published book focuses on aqueous pretreatment of cellulosic biomass to promote sugar release for biological, catalytic, or thermochemical conversion into fuels and chemicals. Introductory chapters provide the rationale for converting biomass to fuels; its importance to national security, balance of trade, and the environment; and insights into biological and catalytic processing to fuels. Also included are in-depth information on the chemistry and biology of cellulosic biomass, leading pretreatments to facilitate its biological and chemical conversion to sugars, and methods important to assess the effectiveness of biomass conversion technologies. In recent decades, interest in converting cellulosic biomass to fuels has closely tracked the price of petroleum: support jumps when petroleum prices are high and wanes when prices drop. “That creates a big challenge,” Wyman said. “The volatility of oil prices and associated enthusiasm for alternatives results in a very unstable environment in which to build a business.” Yet, cellulosic biomass conversion has unique and powerful benefits. It has the potential to substantially reduce greenhouse gas emissions and imported petroleum dependence andis widely available and inexpensive. For example, cellulosic biomass costing $60 per dry ton has about the same cost per energy content as petroleum at about $20 per barrel. “The challenge is, and has always been, reducing the cost of breaking down cellulosic biomass into sugars and other fuel precursors that can be converted into products, and aqueous pretreatment plays a pivotal role for leading biological, catalytic, and thermochemical routes” Wyman said. Continue reading
Another Port and Pellet Pact
Some big news in the pellet industry this week was that Enova Energy group signed a Letter of Intent with the St. Joe Company in Florida to use the port and the AN Railway to ship wood pellets overseas, a minimum of 1 million metric tons. As pointed out in the announcement from Enova, the Port of Port St. Joe (yes, it is the Port of Port St. Joe) is well positioned for bulk cargo shipments, offering access to rail, the U.S. Gulf Intracoastal Waterway and state and U.S. highways. The Port also has a navigational channel that is federally authorized to a maximum of 37 feet, but dredging the Port’s shipping channel to the authorized depth is necessary prior to commencing shipping activities. And it sounds like it’s definitely going to happen. As a footnote, Enova has a biomass power plant in development in Painfield, Conn., that will begin operations during the last quarter of this year. – See more at: http://www.biomassma…h.e0UG9DRQ.dpuf Continue reading
