Jubak: A "Material" Twist
03/17/2006 12:00 am EST
Jim Jubakoffers a fascinating twist to the alternative energy story, seeing opportunity in less-recognized areas. With expected high oil prices and a push towards alternative sources, he notes, "I think we’re looking at a golden age for materials science."
"What does $60 per barrel oil mean? A $60 price isn't just a number. It's shorthand for permanently high costs and soaring global demand. That means big opportunities for companies that can develop new resources efficiently. And investing as if this was just another temporary hike in the price of a barrel of oil isn’t going to cut it over the next decade. $60 oil is shorthand for permanently high energy prices.
"Oh, maybe not at the $60 level if the world’s economy slips into recession or if the world’s consuming countries take strong action to reduce their demand for oil and gas (Hey, don’t laugh. It is theoretically possible.) But, nonetheless, crude oil permanently priced above the $45-a-barrel point makes so many new energy sources and energy technologies viable investments.
"Prices even above $45 is enough to power a search for new alternatives to oil and natural gas. Solar, ethanol, biodiesel, wind, nuclear, and conservation are all candidates for the future energy mix. Which of these alternatives will grab the biggest share depends on technology. The biggest bottleneck in solar, right now, isn’t a lack of subsidies or the price of solar-produced electricity, but the availability of enough silicon solar cells. With wind power, there’s a race to make wind-turbine blades stronger, longer, and lighter.
"In looking for a replacement for the gasoline-powered car, battery technology will be a key. And I don’t think you can count out the old-fashioned internal combustion car just yet. Better computerized controls, better transmissions and other technological improvements could make the current auto more than a match for any hybrid. A study by the Union of Concerned Scientists, for example, was able to rebuild a Ford Explorer to get 36 miles per gallon, a 71% improvement. I think we’re looking at a golden age for materials science.
"I’ve only scratched the surface here, but some companies that deserve a place on your radar screen include DuPont (DD NYSE), which has set a goal of making 25% of its chemical products from biological raw materials by 2010; General Cable (BGC NYSE), which is producing new types of electric transmission cable to address a huge conservation opportunity (distribution losses in the U.S. electrical grid have climbed to 9.5% today from 5% in 1970); to Zoltek (ZOLT NASDAQ), which makes high-performance carbon fiber used in autos and windmills to lower weight and increase strength."