JBL: Profiting From Energy Independence

There are two other nice side benefits. That paper-mill waste no longer piles up in landfill, and by purchasing Xethanol's product, we make Americans rich, instead of having to buy oil from countries that don't like us. Talk about a perfect scenario.

Xethanol just raised $46 million to expand its presence on the East Coast and has hired Christopher Dillow to explore expansion along the West Coast.

The West Coast -- specifically California -- is a big market. Almost all of the 900 million gallons of ethanol that California used in 2004 were imported by rail or ship, and the Golden State currently hosts only about 8 million gallons of production, even though it accounts for one-third of naitonal ethanol consumption.

The company that is currently answering California's ethanol shortage is Pacific Ethanol, which is building a plant in Madera County, and has four more West Coast plants coming online. This company just received an $84 million from Bill Gates' investment arm Cascade Investment LLC. Pacific Ethanol recently delayed its annual report to record this money and an additional $34 million dollars.

Both of these companies are the only pure plays on ethanol, though I would imagine others will try to take advantage of the capital available in the public markets. However, it will be hard to catch up to these two. I plan on holding Xethanol for the foreseeable future. Everything has aligned just right for ethanol.

My only knock against ethanol is that a 10% blend of it in gasoline may result in a 2% to 3% reduction in fuel efficiency. This means I might have to fill up the 528 horsepower truck I have in Texas more often. But I can live with that to be more energy independent.

Remember, being poor is bad, staying that way is stupid.

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