Can’t you hear Nancy Pelosi saying to some farm-belt democrat, “What’s it going to take to get you into this climate bill tonight?”

One of the easiest “outs” for a potential car buyer is to say, “I like it, but let me go home and talk to my wife.”

It is no different with shoddy legislation. “I like it,” say our fence-sitting lawmakers, “but let me go home and talk to my constituents.”

Knowing if a customer leaves the lot, he may never come back, House leaders are working overtime to ensure the latest nefarious piece of legislation to come off of Capitol Hill gets a vote before our elected officials head home for the Independence Day break.

If these guys go home, the deal is off the table, possibly for good. You can count on it.

That is why we will likely see a vote on Cap-and-Trade legislation on Friday. It is the oldest trick in the sales book; rush it through while the emotions are high and don’t give them time to think about it.

The tactic worked perfectly with the trillion-dollar stimulus plan. Remember how many legislators read the actual legislation? We all know how that deal is working out.

All we can do is hope our leaders learned from their mistakes.

The market has spoken

Studying Wall Street, the market appears to have already cast its vote. With most energy stocks well in positive territory so far today, investors are not worried about potential new emissions regulations.

The industry that best indicates the market’s sentiments is the coal industry. While Daryl Hannah is getting arrested outside a Massey Energy (NYSE:MEE) facility, the sector is moving ahead as if the threat of strong obstacles ahead is nowhere in sight.

Massey, Arch Coal (NYSE:ACI), Consol Energy (NYSE:CNX), and my favorite coal producer, James River (NASDAQ:JRCC) are all making strong gains today.

The action is the Street’s way of saying Washington won’t be driving House Bill 2454 off the lot anytime soon.

But the market is not always right.

If it is wrong, savvy traders will have a strong profit opportunity on their hands. If the coal industry suddenly forces great headwinds, today’s prices could look downright expensive.

It is a gutsy bet, but as the week progresses could be one worth taking.

Options players have the best shot at profits. Front-month put contracts will soar in value if the above-mentioned companies take a blow later in the week.

This legislation is moving far faster than most pundits would have imagined just last week. That means the market has had very little time to study the situation and digest the estimates. It also means there is plenty of room for increased volatility.

When the markets are unprepared, just about anything can happen.

That is exactly the way Nancy Pelosi wants it.

Source: Right Out of the Used-Car Sales Book

So here we are in a shaky economy tottering on a ledge and along comes the EPA ready to shove it right off. As The Wall Street Journal reported: “The landmark decision lays the groundwork for federal efforts to cap carbon emissions – at a potential cost of billions of dollars to businesses and government.”

In other words, the war on the so-called greenhouse gases is officially under way – and it is going to be expensive. Each passing month brings us closer to capping, taxing or cutting the gases thought to cause global warming.

I don’t think investors appreciate how far-reaching such efforts could be. And there will be definite winners and losers as a result. Some of these are far from obvious and some are in plain sight.

The first obvious big loser is American coal, from which we get half about of our electricity needs. Already, you see companies reacting to this news. Consol Energy (NYSE:CNX), a big coal company, said it halted two big mines in Appalachia because of uncertainty over the costs of pending new regulations. If you own a U.S. coal miner, I’d fold the hand, so to speak.

Coal-fired power plants look like big losers, too. And the utility AES, the biggest user of coal in North America, is looking to shutter some of its coal plants. It is also looking at how high rates would have to go to comply with possible rule changes. In some places, rates could rise as high as 50%. It is no sure thing that AES could get such rate increases.

Natural gas-fired plants, though, may be one winner relative to coal, because natural gas burns cleaner than coal. Already, in just the last few months, as the market ponders talk of new emissions caps, you could see gaps opening up between coal utilities and natural gas utilities.

Though the new rules could be a year or more away, those gaps may well widen over time as investors anticipate the likely bad ending for coal. So I would not own a U.S. coal utility right now, either. It is no fun wearing a target on your back – especially since the guy throwing the darts makes all the rules.

Instead, I’d rather be the guy who gets to make and sell the new equipment that helps utilities “clean up.” The demand for cleaner-burning fuels will boost the need for its high-quality pumps, valves and seals. These products work to improve efficiency and emissions. Two similar companies I’m keeping an eye on include Fluor Corp. (NYSE:FLR) and Foster Wheeler (NASDAQ:FWLT).

But there is much more…

Besides carbon dioxide, the EPA also named five other industrial gases to its hit list, including methane. This could have an impact on landfills, which emit methane and carbon dioxide. One of the companies I am following is Covanta (NYSE:CVA), which turns waste into energy, essentially replacing landfills. For every one ton of trash burned in a waste-to-energy facility, one ton less of carbon dioxide is released into the air. It also captures the methane gas.

So again, big penalty for those who run landfills – but potentially a boon to those with solutions, like Covanta.

There are many other ways the EPA’s ruling could affect the lay of the land. The EPA could raise fuel-efficiency requirements on cars. It could require more hybrids and electric cars. This would be good for makers of car batteries. It would also be good for the things that go into making more efficient car batteries – such as lithium or cobalt, which are ideas I prefer over the battery makers themselves.

The war on greenhouse gases could also dramatically affect our homes and offices. Worldwide, the energy we use to build, heat, cool and light buildings makes up about 40% of energy demand. This is even more energy than the world’s transportation networks guzzle.

Better insulation, new windows and even more efficient water heaters can make a big difference on the carbon footprint of a building. Just heating water alone can make up 15% of the energy used in a home.

Another company I am following is A.O. Smith (NYSE:AOS). This company has a dominant position in water heaters, as well as a rapidly growing business in China – where the need is more acute. It also makes heating and air conditioning systems. A good chunk of A.O. Smith’s sales come from replacement markets – just fixing what is in place. Stricter building codes and a need to cut energy use could be good for businesses like Smith’s.

However, this is not all driven by government’s iron hand. In fact, in some cases, it is just good business sense. The Empire State Building, for instance, is undergoing a major makeover. But it is one you can’t see from the outside. Instead, it’s all about the insulation, smart meters, new boilers and more. According to the Financial Times: “The retrofit of the Empire State Building will cost about $20 million, but its annual energy savings will be $4.4 million when it is complete.” That’s not a bad payback.

In any event, the efforts to save energy and reduce greenhouse gases – whatever their source – is an important story and sets up a lot of things for us to look deeper into in future letters. We are still early in this game.

Sincerely,
Chris Mayer

Source: How to Profit from the War on Greenhouse Gasses

Suntech Power Holdings (STP: NYSE) has taken us on a wild ride since we added it in January 2007. Its stock price more than doubled toward the end of 2007. Then the stock dropped steeply with the market meltdown in early 2008. The stock is up about 15% overall in the past 16 months or so.Long term, I think that Suntech is a good investment with great potential. The world is building out its solar infrastructures, especially in Asia, where Suntech focuses its solar business.

It’s no secret that fossil fuels are scarce and expensive. This has been good for the likes of CONSOL Energy (CNX: NYSE) and Foundation Coal Holdings (FCL: NYSE).

But the environmental issues for coal and other hydrocarbons are profound. People are getting worried about carbon dioxide (CO2) buildup in the atmosphere. Just based on current emission trends, the earth’s atmosphere is reverting to a CO2 content not seen in over 35 million years, since late in Eocene time.

So in the space of a couple of generations, mankind is reversing tens of millions of years of atmospheric evolution. Is this a serious problem? Or is it nothing much to worry about? Well, no one knows or understands the consequences one way or the other. And don’t let anyone tell you that they do.

In the U.S., both major presidential candidates are talking favorably about a “cap and trade” system for CO2. So solar, as well as wind and geothermal [Kaydon Corp. (KDN: NYSE) and Ormat (ORA: NYSE)], are all positioned well for future advances.

I just added KHD Humboldt Wedag (KHD: NYSE) to the portfolio. It’s literally a “picks and shovels” play on the worldwide cement industry. KHD supplies the machinery and equipment that go into cement kilns.

There is just no way that the developing world can continue to develop without large amounts of cement. So KHD is another great stock for the future.

As for whether I would invest in Suntech or KHD? Well, I’d invest in both. But I think that your question is along the lines of where to invest if you only have limited funds and don’t want to spread them too thin. Fair enough.

KHD strikes me as a safer, long-term growth story. You probably will not see some big, fast run-up in KHD stock. The company is not all that sexy and has a limited following. Still, KHD should earn great profits over the next few years. People will have to buy into the story as the good news comes out. It’s like the old saying, “Slow and steady wins the race.”

On the other hand, Suntech is in the cross hairs of investors as a solar play. With the right news story in a large publication or an endorsement from a major brokerage house, Suntech could soar on short order. But a rapid rise might also be the precursor to a rapid fall. That’s the history with Suntech. A lot of people are “smash and grab” investors.

Long term, Suntech is certainly a good company. But if you’re skirting volatility, KHD wins. KHD is just a boring cement plant builder that traces its roots to the beginning of the Industrial Revolution in the dark forests of Germany.

Cement and Silver

While I am discussing the needs of developing countries, let me mention one other thing that people want besides cement: silver. We can’t stop using it, whether in the form of consumer electronics or as jewelry or as a store of value over time. In the developing world, silver is still the “poor man’s gold.”

Annually, the world uses about 40% more silver than it mines. The difference of “missing” silver comes from recycling, plus stockpiles. But the stockpiles are near the end. And new mine production is unable to meet demand.

So my screaming buy right now is Hecla Mining Co. (HL: NYSE). This great old silver miner’s stock is down from our entry price. But that’s OK, because you can use the opportunity to pick up more shares. Hecla holds great silver reserve and resource positions from Alaska to Central America. Hecla will be mining silver and minting money for many years to come.

That’s all for now. Until we meet again…

Byron W. King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Source: Energy Q&A Part IV: Investing In Energy Stocks and More…

If you thought the big money in commodities had run its course, think again. Right now, a desperate search is underway to locate supplies of the world’s newest commodity.

It’s so scarce that dealers won’t reveal to anyone where they score their supplies. But thanks to my inside contact, I’ve discovered the inside scoop. Now it’s your turn to get there first and easily triple your money!

I’ve recently identified this unique “black market” commodity situation, and if you are one of the first to jump on this opportunity you could see your investment grow exponentially. Allow me to explain…

You see, the blazing-hot commodity I’ve uncovered is in a brand-new part of the raw materials sector is desperate to get a hold of… but simply can’t find a healthy enough supply.

The little-known commodity is vital to many multibillion-dollar corporations’ bottom lines. Names like BHP, La Forge and Rio Tinto all stand to lose billions of dollars each month if they can’t replenish their supply NOW!

The Commodity Crisis You Won’t Hear About on CNBC

You’ve heard about skyrocketing oil prices, and $2,000 gold predictions. In short, we are in the middle of a massive global commodity boom.

But this new crisis is one few have heard about. This precious information has been kept under wraps by these companies because of the fierce competition for their dwindling supplies. In fact, the shortage of this commodity is getting so critical, industry insiders fear a dangerous black market is looming.

Thanks to my global network of contacts, I’ve managed to pinpoint the absolute best way to play this new commodity crisis. With classified information from one such well-placed contact, I’ve just uncovered a document that could be worth a substantial amount of money to this company I’m about to recommend… which could, in turn, mean a massive fortune for you.

Because you’re a valued Taipan Daily subscriber, I wanted to get this information to you before it hits the mainstream media. That way, you can get in first and enjoy a very lucrative ride.

This is an extremely time-sensitive situation, so let me give you a quick overview of the opportunity…

Secret Location Revealed!

I just received an overnight delivery of a packet of information, sent to me by my trusted source, which reveals the location of a vast reserve of this new “black market” commodity. It is certain to give one of these companies a giant leg up on the competition.

The fantastic news is that the company I just uncovered is set to make a killing and could deliver early investors a 127% gain in the next few months.

There’s just one catch: My contact made me promise that this sensitive information only be shared with my loyal readers. I just put the finishing touches on a confidential profit report that details this highly lucrative special commodity situation.

Of course, I gave my paid-up BreakAway Investor subscribers first crack at this report. I offered them the opportunity to claim this report just three weeks ago… and the stock has already gained more than $4 in share price since that time.

In just a moment, I’ll tell you how to get your hands on this report. But first, let me fill you in on more about this situation…

This won’t be the first time a commodities stock has delivered huge gains. In fact, commodities stocks have been on fire for the past two years:

• Consol Energy (CNX:NYSE), the No. 1 play on coal mining, skyrocketed 140% since the beginning of 2006!
• Freeport McMoRan Copper & Gold (FCX:NYSE) shot up 119% since 2006!
• Kaiser Aluminum Corp. (KALU:NASDAQ) jumped 65% since 2006!
• Randgold Resources Ltd. (GOLD:NASDAQ) exploded returning a hefty 200% since 2006!

And now it’s about to happen again with the commodity company I’ve discovered.

Your Last Chance to Receive This Urgent Information

You see, the stock I’m tracking today offers similar potential. In fact, I’m absolutely confident that folks who get in now can expect an easy triple in the next 12 months.

To help you participate in this lucrative situation, I’ve put together a brand-new special report with all the details about this company, including its stock symbol.

With your permission, I’ll have my customer service department rush a copy of the report to you. In return, all I ask is that you give my monthly research service, BreakAway Investor, a try.

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In fact, in the last few years alone, my expertise has helped BreakAway Investor readers pull in gains like…

• 530% on Generex…
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Take the next 90 days to decide whether BreakAway Investor is right for you. If you like it, great. If you don’t, you can cancel — no questions asked. The important thing to remember is this: Within seconds after your positive reply, you’ll be able to download my brand-new Research Report, “Beat the Black Market Commodity Crisis!” The report will give you all the details about the stock I’ve been telling you about.

Remember, this company could easily deliver triple-digit gains over the next year, and has already gained more than $4 per share just in the past three weeks alone!

Plus, as a new subscriber to BreakAway Investor, you’ll gain immediate access to my current portfolio. This includes over a dozen of mycurrent investment recommendations, including some of the most unique and lucrative stocks and mutual funds on the planet. As a subscriber, you’ll get the inside scoop on every single one of them.

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Plus, if you act now, you’ll instantly receive a $100 bonus gift!

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You have absolutely nothing to lose. And your upside on this opportunity is enormous. But you must move quickly. This opportunity is extremely time-sensitive and could really impact your financial status. I would hate to see you miss out on such a lucrative opportunity.

Go ahead and follow this link to reserve your risk-free trial… and to download your free copy of “Beat the Black Market Commodity Crisis!”

Source: Beat the ‘Black Market Commodity Crisis’ With This Little Known Resource Gem

I heard some of the “inside baseball” information on one major DOD program that will convert large amounts of U.S. coal into synthetic liquid fuel. This will be a government-industry partnership, with the U.S. Air Force as the lead agency.

In essence, the Air Force is offering a pilot site for a coal-to-liquid (CTL) project at a base in Montana. This will be the first of many such CTL facilities around the nation. The idea is that funding will come from the private sector, not the Air Force or any other government source.

The Air Force will sweeten the pot, however, by guaranteeing that it will purchase the fuel that comes out of the CTL plants. Eventually, much of the Air Force fleet will fly on a mixture of CTL fuel and traditional petroleum-based fuel. For the past two years or so, the Air Force has been qualifying its planes to fly on synthetic fuels. Just recently, a B-1B “Lancer” bomber went supersonic over New Mexico on a mix of synthetic fuel. So synthetic fuels work.

The Wagon Train Is Forming Up

Some of the synthetic fuels information has made it into various trade press publications. But the major media have pretty much ignored the synthetic fuels development. Even on Wall Street, this program is under the radar screens. I guess the people on Wall Street are too busy counting up their losses from subprime mortgages. But the wagon train is forming up on the trail to synthetic fuels. Things are going to start happening, and soon.

The idea is to jump-start a large U.S. military-industrial CTL program that will eventually serve the rest of the economy. The CTL projects will cost over $5 billion each, based on preliminary estimates. In other words, each CTL refinery will cost about as much as an aircraft carrier, and use about as much steel and equipment.

This ambitious CTL project will have major implications for the future of the coal-mining industry, as well as many companies in the engineering, construction and capital equipment sectors. It made me glad to have the likes of CONSOL Energy (CNX: NYSE) and Foundation Coal Holdings (FCL: NYSE) in the portfolio. I already have some other ideas for additional investment opportunities in this sector. So keep your Outstanding Investments subscription current.

Future Liquid Fuel Supplies — We’re Running out of Time

CTL will surely generate controversy. I cannot begin to describe the visceral opposition to CTL projects from the usual suspects. The NIMBYs, the environmental lobbyists the “global warming” activists and many others will all fight against CTL with tooth and nail. You will hear glib arguments about how “If we just do this or that” (windmills, biofuels, conservation, etc.) we can avoid the need to build any CTL plants. As a nation, we should “do this or that” in any event. Really, we need to do everything. But we will also have to build the CTL plants. The opposition to CTL reflects how deeply the “Just say no” approach is hard-wired into our modern culture.

The U.S. could get away with avoiding major capital investments in energy projects when the dollar was strong and oil was cheap. (How else did we wind up importing two-thirds of our daily oil?) If the U.S. needed oil, we just waved dollars and the tankers showed up at the piers. But no more.

It is crystal clear that the U.S. no longer has long-term assured access to liquid fuels. I hope you got the memo. This reality is rapidly transforming into a supreme matter of national security. A U.S. CTL industry cannot come about too fast, in my view. The nation is not “running out of oil,” technically speaking. But not enough oil can cause just as much havoc as running out. And the national “adult supervision” sure knows that the U.S. is running out of time. Let’s look at the present and forecast the future.

Oil Output and Supply

First, let’s discuss the U.S. oil supply going forward. The U.S. presently consumes about 21 million barrels of oil per day. This is a mix of domestic output (much coming in small quantities from several hundred thousand old stripper wells) and imports.

According to the most recent figures from the U.S. DOE, in January 2008, U.S. crude oil output was just over 5 million barrels per day, plus additional natural gas liquids. The balance of oil consumption comes from imports. (Also, the U.S. supply of transportation fuel is supplemented about 3-4% with ethanol that comes from distilling about half the U.S. corn crop. That is why your grocery bill is skyrocketing.)

But domestic volumes of oil output are depleting and declining inexorably. From the North Slope of Alaska to the deep water of the Gulf of Mexico, U.S. output is just plain falling. There is very little good news, and even the good news is oft-times not so good.

New discoveries and new wells just cannot keep up with depletion of older oil fields. By 2025, U.S. daily oil output will be a fraction of its current level (probably down to about 2-3 million barrels per day), even with an aggressive program of drilling offshore and in Alaska — which is not happening, in any case.

Also by 2025, U.S. imports will almost certainly decline. The oil will not be available to buy and import from world markets. Not everyone agrees with this. In one fanciful projection from 2005, the U.S. DOE forecast that “Total U.S. gross petroleum imports are projected to increase in the reference case from 12.3 million barrels per day in 2003 to 20.2 million in 2025.” Maybe in somebody’s dreams, but my view is that this is one projection that will never come true.

Really, by 2025, the rest of the oil-producing world will simply lack the product to export. This will be due to reasons of depletion on a global scale, and fast-growing internal demand in oil-producing nations. Gasoline consumption in places as diverse as Russia, Iran, Venezuela and Saudi Arabia is just soaring, so there is less net oil available for export.

And oil output everywhere is flat or declining. (Just last month, Russia announced a plateau in oil output.) And closer to home, Mexico’s Cantarell field is simply crashing at an annual depletion rate of 8% or more.

So what will happen in 2025? Will the U.S. pump its own oil? No, it’s not there. Will the U.S. continue to import large volumes? No, it won’t be available. The bottom line is that conventional oil sources for the U.S. — domestic output and imports — are simply drying up.

Be on the lookout for Part II tomorrow!

Until we meet again,

Byron King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Source: The Coal To Liquid Debate Part I

Last week the Associated Press reported, “Utilities nationwide are raising rates and are likely to push for even more dramatic increases in electric rates in the coming months.”

Americans are already strapped for cash due to rising gas and food prices and a sinking real estate market. So why’s electricity joining the scrum?

Well, a large part of the blame lies with steel… As I wrote last week, steel prices worldwide are skyrocketing. This week, we’re going to look at one of the ramifications of soaring steel prices… soaring coal prices.

Coking coal is the type of coal used in steelmaking. Demand from steelmakers is driving prices higher. In fact, many steelmakers, including the world’s second-largest producer (Nippon Steel), recently agreed to pay triple what they previously paid for coking coal.

Take a look at the following chart of coal prices since 1996…

The Global Insight coal index doesn’t contain any U.S. coal – it’s 60% South African, 30% Colombian, and 10% Australian. But the market for coal, like oil, is global. When the price of foreign coal spikes, the U.S. exports more of its coal… resulting in higher U.S. prices.

So the steel rally has swept coal along with it. But coal prices have not yet gone parabolic like steel prices. Does that mean coal is a good buy for people who are bullish on steel?

Trend followers might find coal attractive. But there’s no easy way to bet on the price of coal except through coal stocks… And coal stocks are expensive right now.

Take a look at the following chart…

Coal Stocks are Expensive

Investors are excited about the coal industry and have bid up the price of coal producers in relation to the price of coal. And any falter in the growth rate of coal prices could lead to a sharp drop in these stocks. So here’s how to play the coal boom.Wait for just such a pullback before buying your favorite coal stock. A few of the big names are Peabody (BTU), Consol (CNX), Massey (MEE), and Arch (ACI). Or you can buy a basket of coal producers with the Market Vectors Coal ETF (KOL).

Coal produces about half of all the electricity generated in the U.S. With coal prices soaring, it’s likely you’ll feel the effects of soaring coal prices in your electricity bill… But if you buy coal producers at the right prices, you should see some profit, too.

Good investing,

Ian Davis