With oil surging above the $100 a barrel mark and headed for who-knows-where, it’s time to seriously look again at alternative fuels. Although there has been a recent uptick in one sector of the green economy (solar stocks), prior to that it looked as though ethanol stocks would be the rage. This falling in and out of fashion, along with the adjustments of business models, costs and profit projections, as well as the fortunes of all facets of the alternative energy field, are likely to ebb and flow as these young industries grow into the future.
One alternative energy company involved in this ebb and flow of fortunes is Gulf Ethanol Corp. (OTC: GFET), which is a small entry in the ethanol field out of Houston, Texas. They feature a particular type of technology and product, cellulosic ethanol, and sell fuel to North American markets. Typical of such small companies, its numbers are highly fluid. CNN Money lists Gulf Ethanol with an $8.6 million market cap, while other sources, including the company, peg this figure at $26-$28 million. It registered a 1 cent-per-share loss in earnings for the trailing twelve months. They deal in cash flows of hundreds of thousands, not millions of dollars at this stage. The stock has traded in a range of 0.65-3.01 in the last 52 weeks, so you can see it is small, speculative and volatile—a true micro-play for traders.
So what’s the appeal? Estimates for the next twenty years range in the several trillion dollar range as far as investment in the alternative energy field. Ethanol is an ethyl alcohol, also known as drinking alcohol or grain alcohol, which is usually processed by fermenting sugars and yeast. With the cellulosic process, instead of using grains directly in the process, abundant plant remains such as corncobs, straw and sawdust—all cellulose– may be used, though they must undergo a hydrolysis process of fermentation to make them bio-available. Genetically engineered cellulose is being developed, also. These processes are an attempt to make cheaper and more readily available for fuel.
The nascent ethanol industry contends that these ethanol fuel blends will be more efficient than gasoline, and that the cellulosic ethanol will be more efficient than even grain-based ethanol. With the widespread availability of cellulose, it will also provide cheaper fuel for transportation, particularly as the technologies of processing the cellulose into ethanol improve.
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