In a day and age where oil is 100 dollars a barrel and “peak oil” is all but a foregone conclusion, seeing a company such as Alliance Recovery Corp. is a welcome sight. As investors, we know that for each barrel of oil they can produce from discarded car and truck tires, there is a revenue stream, and with oil showing absolutely no signs of coming down any time soon, the profit potential is tremendous. We know that there are millions of tires that are disposed of each year, and frankly they are more of a burden to most townships, than any form of a positive.
Yet, there is another aspect of Alliance that might not be quite as evident, and yet makes the company so attractive from the “green” perspective. With the push for becoming better stewards of the earth we live on, “green” in all its facets is in the news on a daily basis. From fuel efficiency to pollution control. We all know that discarded tires are a significant problem. But, are we all sure we understand the scope of the problem? One would be hard pressed at first blush to connect the dots between a child that becomes sick with the West Nile Virus, to a tire dump in rural New York State. Yet this is exactly what health officials are doing. Connecting very interesting dots.
In reading a statement from the New York State Department of Environmental Conservation, we were not surprised to see the problems that used tires in land fills presents. No it’s not just the unsightliness, which should be at least a consideration. No it’s not that they are hard for the landfill to “digest”. No it’s not the fact that they have a habit of working their way back to the surface and blocking run off trenches. But there are two significant areas that seem so totally unconnected that it’s going to fly under the radar of most investors.
According to the NYSDEC, In July 2004, they released results of a comprehensive review that was conducted between August 2003 and May 2004, which identified approximately 95 locations, containing an estimated 29 million tires that didn’t meet the requirements for proper tire disposal. And what is the biggest risk factors to these tires? Although mosquito borne disease has been traced to stagnant pools of water in discarded tires, that’s not the biggest threat they produce. When tire piles burn, enormous environmental problems occur. Significant air pollution results from the incomplete combustion of the tires, creating a thick, black, foul-smelling smoke. Carbon and gasses are released that are the exact components necessary to create global warming. Additionally, as many of the tires melt and partially burn, an oily discharge occurs that can flow into nearby streams, ditches and waterways or can seep into the ground water.
Tire fires are extremely difficult to extinguish and many fire departments that have large local waste tire piles within their jurisdiction have emergency plans in place to deal with the difficulties associated with managing a tire fire. An example is the Rhinehart tire fire in Winchester, Virginia, containing some 9 million tires, burned for nearly nine months. This uncontrolled burning of tire piles produces smoke and toxic air pollutants, including benzene and polycyclic aromatic hydrocarbons (PAH). The intense heat leads to the generation of pyrolytic oil that mixes with extinguishing material, contaminating surrounding soils, surface waters, and groundwater.
If all Alliance Recovery did was make oil that they could sell for 100 dollars a barrel they’d be worthy of investigation, because the revenue stream and profits would surely follow. But the fact that they can so significantly impact the environment in such a positive way as to remove millions of these hazardous tires per year makes this a much broader story than “another alternative fuel source”.
For instance, a solar panel produces energy by taking in sunlight. It’s a wonderful thing. But does it do anything to help clean up the environment we already have? Not really, it simply helps you stop adding more damage to it. Alliance takes it ten steps further and literally takes contaminants out of the environment.
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