Gassing Up the Biofuel Sector

03/28/2012 7:15 am EST

Focus: ENERGY

Andy Obermueller

Editor, Government-Driven Investing

As gasoline prices continue to rise, fossil fuel alternatives are again getting the attention of many investors and consumers, both individuals and industrial, writes Andy Obermueller of Fast-Track Millionaire.

The US Navy said that it successfully tested a Solazyme (SZYM) 50-50 blend of petroleum and renewable marine diesel derived from algae.

The frigate USS Ford sailed from its home port in Everett, Washington, to San Diego, a trip that took 25,000 gallons of the algae-fuel blend. The ship's engines need no modifications to burn the fuel, which can be delivered from a standard fueling pier.

To date, the company has delivered more than 132,000 gallons of biofuel to the Department of Defense, which is the largest energy user within the federal government. The Pentagon, which has tested the fuel in other vessels and applications, said last September that it had awarded Solazyme an R&D contract for a 100% algae-base fuel.

The biofuel space has never been taken seriously. There is always the idea that it doesn't work, and that it's a fad that eventually will fizzle. The trouble is, that doesn't appear to be true. Biofuel is relatively expensive, yes, but new technologies always are expensive early on.

Plus cost is ultimately not the Pentagon's biggest concern, and they are determined to fill as much as half of its energy needs with renewable domestic sources. Those early orders will help the nascent industry build out, work out its kinks, refine its business model, and achieve profitability.

Biofuel is not the only solution to the nation's energy needs, but it is legit. And we're beginning to see gains as Wall Street realizes that this train is leaving the station.

Biofuel is indeed the ultimate game-changer. Aggressive growth-oriented investors should consider shares of Solazyme.

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