Is algae oil the next big biofuel investment?
As the continued hunt for biofuels that can wean the U.S. off of foreign oil and reduce greenhouse gases continues, more and more companies want in. And, not surprisingly, some Big Oil companies are diversifying their investments in order to be "in" when alternative energy really takes off.
One of the more interesting concepts is the derivation of biofuels from algae. The substance is called "algae oil," and the federal government is back in the game after quitting for ten years. Chevron (CVX) is investing as well — looking for a piece of what might be a slimy, green pie. But there are issues. Right now, reports the AP, it costs about $20 a gallon to produce algae oil:
"If you can get algae oils down below $2 a gallon, then you'll be where you need to be. And there's a lot of people who think you can," said Jennifer Holmgren, director of the renewable fuels unit of UOP LLC, an energy subsidiary of Honeywell International Inc. (HON).
Other companies are looking into algae oil as well. Valcent Products (VCTPF.OB) is investing in algae research and production in Texas. It's a small company in the penny stock range. But it is increasing in value, and could be an interesting pick for investors looking for a bargain with some extra money to play with.
The wider implications, however, are clear: Even though many of these alternative fuels aren't quite cost-efficient, technology is catching up. It's more than possible that these fuel alternatives of the 21st century will begin to make serious inroads against oil, the fuel of the last century. More and more interest in biofuels is mounting, and the recent dramatic drop in oil prices — to below $90 a barrel — can't erase the fact that just last week oil almost reached $100.
Disclosure: I invest in none of the companies above, but I am looking into Valcent Products as a penny stock option right now.
Photo:Josh Smith, Creative Commons, Flickr