Uncle John's Cabin

Oh! The Hypocrisy of it All or "An Inconvenient Truth"

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/rant on

I just read that class action lawsuits have been filed against the major oil refineries for adding ethanol to their gas since 2004 brought about in California by marine engine and boat owners. Typically, the fuel tanks on these boats are fiberglass which can be dissolved by the ethanol. Didn't we already know ethanol was corrosive? Anyone that watched CNBC, Fast Money or followed Jim Cramer did. I'm sure many other analysts, TV shows, newspapers and magazines did as well.

I just love that this starts in California, the environ-mental state. Weren't they a major part of the ethanol craze with the Gore backers to stop global warming? I'm going to say something crazy here, possibly even treasonable, but "An Inconvenient Truth" about "global warming" is that it is only a scientific theory at this time. It states that there is a possibility that the greenhouse gasses caused by burning fossil fuels is changing the global climate. This is an unproven theory folks! Al Gore and his supporters are claiming that this is scientific fact when it simply is not. I will not agree or disagree with this theory until actual scientists can prove it one way or the other. Until then, I am a skeptic.

This does not mean that I don't support efforts to stop polluting the planet and for conservation. I am completely for it. But, only when facts are used to determine policy and not an ex-politician turned Oscar winner with no formal expertise in anything but politics and law. In virtually every case, all energy usage has pros and cons including the fuels we use today. Wind farms kill birds. Solar actually could change climate adversely if used widely enough. (For all you non-scientific people out there, it is a scientific fact that all energy in conserved. This means that if you take the sun's energy and convert it into electricity, that same amount of sun power will not be used to heat up the earth. Imagine the extreme situation of covering the Gobi desert with solar panels. This would reduce the temp in that area drastically and would very likely affect global weather patterns.) Nuclear power... hmm, do I even need to mention anything other than 20 years ago, permits for these plants were stopped being issued due to the hazards or radiation? Now, its on "Big Al's" list of possible energy sources. Hyrdo-electric power? Those poor fish. Ethanol? Corrosive, expensive to create in terms of the energy and clean water used to make it and has the bonus side effect of raising the cost of food including grains and meat. There is no free lunch people. Everything has a side effect we don't like. Determining policy on fact instead of one-sided popularistic slide shows seems to be a better way. Examine the costs of both sides and determine the effects considered least harmful. Make up your own minds. Don't let a pretty slide show in the theater do it for you!

Remember, California is the same state that allows everyone to vote on anything (unlike a republic, which the US of A really is, not a true democracy) and ended up voting for Prop XX (I forget the number) that capped the price of electricity and then went through a major crisis when power companies refused to sell electricity at lower than cost? Even neighboring states would not help out those clever Californians who ended up with rolling brown-outs that reeked havoc on the silicon industry? The result of these actions? The governor was forced to resign by blaming him for their problem (due to the law they voted in, not the state congress, nor the governor) and they held a quick election with no time to prepare and now we have "The Governator" in charge of the state. (Sorry Arnold, nothing against you or the job you are doing that I know of, just how you got into power.)

OK, so how does this affect the markets? You have to remember that all the environmental causes have huge lobbies whose only job is to raise money using scare tactics then use that money to influence elections and votes in congress. (I wish they were public companies, I would buy them.) That's how we got the ethanol laws on the books despite virtually anyone "in the know" ever getting a chance to explain some of its more harmful effects. I'm still looking for a play here. Whatever the next "great cause" is will probably have a large effect on some companies. Certainly not in the timeframe of this game, but within the next few years I would expect a reduction in ethanol production to be on the law books. I don't want to be holding the bag on that one in 3 years. Solar will probably move up the list until someone realizes that if we covered the entire globe with solar panels, the earth would freeze. I don't see people figuring that one out for many years. Natural gas seems to be a good longer term play. It's available locally in North America, its clean burning and its relatively cheap compared to oil (compare BTUs per dollar.) But, we will have to open up some reserves to get to the gas and some prarie dogs might suffer. Nuclear is so far away, it takes over 10 years to build a plant once a permit is granted that I won't be looking for a play there for at least 5 years. Clean coal technologies seem to be here and now and when I find the right company there, I think that might be a good play. Any form of conservation should do well except when it is similar to those fancy new light bulbs that are one of the most toxic things we can put in the ground after they burn out.

Realistically, we probably have to trade some birds for power, some sunlight for solar, some habitats for natural gas, some radiation for coal (yes coal power plants actually leak more radiation then nuclear power plants) with some higher cost for cleaner burning coal and some nuclear waste for nuclear power. A mixture and balance that takes the best of technology and does the least amount of harm should be the way of the future, but only if rational two sided discussions are held that point out the pros and cons of each technology; not based on popularist tripe, slide shows or lobbyists.

Sorry this was more of a rant than an actual stock play. But it does seem important to me to consider rational two sided discussions on this topic. Just like owning (MO) or (PM) is profitable even if smoking is proven to be bad for health and generally considered to be bad in the long run economically, the next latest and greatest environmental craze should be profitable in the stock market as well, even if it makes no sense.

/rant off

Today I put my thinking cap on and realized it didn't work. The world is still crazy.
Uncle John

P.S. Sorry to any Californians out there. Nothing personal.