Today we use a petroleum product instead of bamboo or cotton, but the process remains virtually unchanged. And with technological advances, the future of carbon fiber is astounding.

Carbon fiber, with a higher tensile strength than steel, will soon become the material of choice for almost everything you can imagine. But I want to focus on two huge growth opportunities that I believe will push carbon fiber to the forefront.

The first is the automotive industry. Carbon fiber is currently used to produce lightweight hoods, fenders, trunks, spoilers and various other parts for the aftermarket segment. A few small-run production cars use carbon fiber extensively in their construction, with an accompanying exorbitant price tag.

This is all about to change. With the newer fuel economy mandates, manufacturers will need to make their cars lighter. While aluminum is an option, carbon fiber will likely become the preferred alternative. That means the carbon fiber industry should get a huge boost over the next 5-10 years.

The second growth opportunity is related to alternative energy. Wind turbines are becoming more and more common. In 2007, production of wind-turbine blades increased 38% over the previous year. And as the turbine operators look to squeeze more juice out of every gust, they are turning to larger and lighter blades. This is a job for carbon fiber, not steel.

So how do you take advantage of these two growth sectors for carbon fiber? You find a company that has proprietary technology that allows it to produce some of the lowest-cost carbon fiber on the market.

That company is Zoltek (NASDAQ:ZOLT). While the stock has taken its lumps with the rest of the market over the last year or so, the company has spent the time going after new customers attracted to its lower manufacturing costs. It is perfectly positioned to rebound once the economy turns and demand for carbon fiber skyrockets. The current stock price has rebounded nicely from the November 2008 and March 2009 lows, and should resume its climb back up to the $40/share range from its current $12/share. That would be a very nice gain in your portfolio. Of course, you should perform your own research. But I think adding ZOLT is a fantastic play on the growing demand for carbon fiber.

Source: Take Advantage of the Growing Demand for Composite Materials

Indonesia no longer has the ”E” to stay in OPEC (Organization of Petroleum Exporting Countries). It had been a net importer of oil since 2004.

Casey Research’s Energy Division attended the recent oil and gas show in Jakarta, and it’s plain to see where the new oil demand is coming from. Greater Jakarta, Indonesia’s capital, hosts 23 million people, and while ten years ago the majority of them rode bicycles, now nearly everyone has a new 2-stroke Honda motorbike. Those who were riding motorbikes are now driving cars. (And those who were driving cars have moved to Australia to escape the smog.) In this light, it’s not surprising that Indonesia’s oil consumption has more than doubled since 1990.

As to their slumping oil production, it is no doubt partially due to a lack of reinvestment. Foreign oil companies are tired of paying 85% of their revenue into government coffers, and are looking to areas of the world where the fiscal regime is not as severe.

The main problem, however, is an extremely common one. Indonesia has exploited its fattest hydrocarbon targets, and the remaining exploration sites cannot make up for the decline from its existing oil fields. There’s certainly plenty of oil left to be found in Indonesia’s archipelago, but it’s equally certain that they’ll never regain their peak production rates of 1.6 million barrels per day.

Source: Indonesia Says ‘Goodbye OPEC, Hello Peak Oil’

I live in Pittsburgh, and grew up here as well. Both figuratively and literally, Pittsburgh is built on coal. Coal is the remains of ancient plant life, buried within the rock record.

For example, one of the most extensive and valuable mineral resources in the U.S. is called the Pittsburgh Coal Seam. The Pittsburgh Coal Seam shows up in outcrops all over town, if you know where to look and what you are seeing. But there is a lot more to this hunk of rock.

The Pittsburgh Seam extends underground all over western Pennsylvania. The Pittsburgh Seam is high-grade coal and can be as much as 6-8 feet thick. That’s a lot of energy stored up in one place.

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A Behind-the-Scenes “Guest Pass” to Profit in the World’s Most Secretive “Millionaire’s Market”

Beginning tomorrow at 7:10 A.M. EST, you can use your guest pass to go behind the scenes in the financial community’s best-kept secret: the “Millionaire’s Market.”

Once inside, you’ll begin to legally “withdraw” $810 or more per week — and you’ll be able to deposit the money directly into your retirement account!

Read on here…

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A century or more ago, coal from the Pittsburgh Seam was abundant and cheap. People heated their houses with coal, cooked with coal, powered simple engines with coal. And all over western Pennsylvania, people like Henry Frick and Andrew Carnegie pulled a heck of a lot of money out of that Pittsburgh Seam.

They built mines, powered mills and created immense industries based on burning coal. More fundamentally — if not philosophically — they profited from harnessing and releasing the stored-up energy from ancient sunshine.

Energy and Capital

Let’s think about that for a moment. It was not that capital was cheap back in the last century. Gold was gold. Money was money. When they borrowed funds, Frick and Carnegie paid the same interest rates as anyone else anywhere else. But they succeeded, and did so in great fashion. What was their advantage?

Well, it gets back to that Pittsburgh Coal Seam. In the last century, western Pennsylvania had rich seams of coal located near the surface. Pittsburgh had proximity to some of the best energy reserves in North America. So coal became the foundation of industry. Energy powered industry, and industry created wealth.

The rivers of western Pennsylvania made it easy to transport that coal. That is, using barges to float things down the rivers required relatively less energy per ton-mile to move the coal to Pittsburgh’s mills. And using the rivers meant that it required less energy per ton-mile to move the value-added products out to the interior of the country, and to the world. (For example, the steel locks on the Panama Canal were built at Pittsburgh and floated down the Ohio and Mississippi rivers, across the Gulf of Mexico and to Panama.) Yes, it took capital to gain access to the energy sources. But the energy sources also leveraged the capital.

In its own way, energy is a form of capital, isn’t it? And it is a major competitive advantage to control a source of low-cost energy.

In fact, control over reliable sources of low-cost energy may be even better than access to cheap capital, especially in years to come. There are so many dollars in this world that almost any darn fool can borrow them, or how else to explain what has been happening on Wall Street lately? But ample and low-cost energy can certainly multiply the effectiveness of capital. Ask Frick or Carnegie.

The Price and Consequences of Using Coal

Have you seen the price of coal lately? In 2008, thermal coal prices are set to double, from about $55 to $125 per ton. That’s based on a recent agreement between Japan’s Chubu Electric Power and the giant mining firm Xstrata, and it should become the benchmark for 2000-09 contract prices worldwide.

~~~~~~~~~~~~~Special~~~~~~~~~~~~~

Brace Yourself, It’s Coming

We asked all the market experts we know, and they all agreed on one thing: a coming stock market apocalypse. The writing is on the wall, and the catastrophe we’ve been hearing about could be here sooner than later.

If you haven’t started planning for these disastrous events, you’re already behind the pack. Start your survival plan now. Click here for details…

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Spot prices for thermal coal have tripled in the past 12 months. And spot prices for coking coal (used to make steel) have quadrupled in the last 12 months. Just in the last two months, those prices have doubled. Do you notice any patterns?

Let’s boil it down to a few key points. The cost of the world’s “traditional” energy source — coal — is skyrocketing. And about 40 percent of the world’s electricity is currently generated using coal. Many other industries use even more coal, from steel makers to cement kilns.

So if coal prices are going up, what will that mean for electricity prices, or steel, or cement or whatever? They are headed up, as well. I would say grab your oxygen mask. But that’s a bad joke, because of the carbon dioxide (CO2 ) issues that people blame on coal.

The Time for Geothermal Arrived

So where can we in North America get significant amounts of “clean” electricity with minimal CO2 emissions? Not from coal. How about windmills? Yes, when the wind blows. How about solar? Yes, when the sun shines. And how about geothermal? Yes, all the time. 24/7/365.

Really, the stars of economics and politics are aligning on this one. The time for geothermal has arrived. Welcome aboard.

Until we meet again…
Byron W. King

P.S.: As long as we’re talking about energy, did you happen to see oil prices yesterday? Somehow oil almost touched $120 and things are still looking grim. As OPEC continues to squabble and Peak Oil reaches the front pages, could $150 or even $200 oil be that far off? Click here to decide for yourself…

For example, one of the most extensive and valuable mineral resources in the U.S. is called the Pittsburgh Coal Seam. The Pittsburgh Coal Seam shows up in outcrops all over town, if you know where to look and what you are seeing. But there is a lot more to this hunk of rock.

The Pittsburgh Seam extends underground all over western Pennsylvania. The Pittsburgh Seam is high-grade coal and can be as much as 6-8 feet thick. That’s a lot of energy stored up in one place.

A century or more ago, coal from the Pittsburgh Seam was abundant and cheap. People heated their houses with coal, cooked with coal, powered simple engines with coal. And all over western Pennsylvania, people like Henry Frick and Andrew Carnegie pulled a heck of a lot of money out of that Pittsburgh Seam.

They built mines, powered mills and created immense industries based on burning coal. More fundamentally – if not philosophically – they profited from harnessing and releasing the stored-up energy from ancient sunshine.

Let’s think about that for a moment. It was not that capital was cheap back in the last century. Gold was gold. Money was money. When they borrowed funds, Frick and Carnegie paid the same interest rates as anyone else anywhere else. But they succeeded, and did so in great fashion. What was their advantage?

Well, it gets back to that Pittsburgh Coal Seam. In the last century, western Pennsylvania had rich seams of coal located near the surface. Pittsburgh had proximity to some of the best energy reserves in North America. So coal became the foundation of industry. Energy powered industry, and industry created wealth.

The rivers of western Pennsylvania made it easy to transport that coal. That is, using barges to float things down the rivers required relatively less energy per ton-mile to move the coal to Pittsburgh’s mills. And using the rivers meant that it required less energy per ton-mile to move the value-added products out to the interior of the country, and to the world. (For example, the steel locks on the Panama Canal were built at Pittsburgh and floated down the Ohio and Mississippi rivers, across the Gulf of Mexico and to Panama.) Yes, it took capital to gain access to the energy sources. But the energy sources also leveraged the capital.

In its own way, energy is a form of capital, isn’t it? And it is a major competitive advantage to control a source of low-cost energy.

In fact, control over reliable sources of low-cost energy may be even better than access to cheap capital, especially in years to come. There are so many dollars in this world that almost any darn fool can borrow them, or how else to explain what has been happening on Wall Street lately? But ample and low-cost energy can certainly multiply the effectiveness of capital. Ask Frick or Carnegie.

Have you seen the price of coal lately? In 2008, thermal coal prices are set to double, from about $55 to $125 per ton. That’s based on a recent agreement between Japan’s Chubu Electric Power and the giant mining firm Xstrata, and it should become the benchmark for 2000-09 contract prices worldwide.

Spot prices for thermal coal have tripled in the past 12 months. And spot prices for coking coal (used to make steel) have quadrupled in the last 12 months. Just in the last two months, those prices have doubled. Do you notice any patterns?

Let’s boil it down to a few key points. The cost of the world’s “traditional” energy source – coal – is skyrocketing. And about 40% of the world’s electricity is currently generated using coal. Many other industries use even more coal, from steel makers to cement kilns.

So if coal prices are going up, what will that mean for electricity prices, or steel, or cement or whatever? They are headed up, as well. I would say grab your oxygen mask. But that’s a bad joke, because of the carbon dioxide (CO2) issues that people blame on coal.

And look at the current U.S. presidential race. All three potential nominees (Obama, Clinton and McCain) are discussing issues related to CO2 and associated climate change. All three candidates discuss the need for the U.S. to utilize what is called “clean-coal technology.” And I live just a few miles from a major U.S. Department of Energy “clean coal” research center. So I know that there is some great “clean coal technology” out there, and more coming down the pipeline.

But at its root, “clean coal” really means taking expensive coal and making it more expensive in order to use it. So face it. In the U.S., the days of burning raw coal and living with belching smokestacks are gone with the wind.

You can believe in the climate change argument or not. But your personal view on climate change does not matter for these purposes. The next president of the U.S. (and much of the next Congress, as well) will not be “friendly” toward old-fashioned coal-fired electricity. That is already baked into the political cake.

So can we predict the future? Well, nobody can. But we can connect the dots and make some intelligent forecasts. The dynamics of electricity are changing.

Whether you like it or not, people all over the world are burning coal. The black rock is getting scarce, and prices are going up. Those contracts are already signed.

Here in the U.S., as well, much of the nation’s electrical capacity is based on burning coal. So electricity costs in the U.S. will rise with the prices for coal. That is just “Public Utility Regulation 101.”

And to add to the problem, U.S. national policy is headed toward less energy generated from coal. This is due to CO2 concerns. Read the Web sites of the presidential candidates.

So where can we in North America get significant amounts of “clean” electricity with minimal CO2 emissions? Not from coal. How about windmills? Yes, when the wind blows. How about solar? Yes, when the sun shines. And how about geothermal? Yes, all the time. 24/7/365.

Really, the stars of economics and politics are aligning on this one. The time for geothermal has arrived. Welcome aboard. How can you take advantage?

Until next we meet,

Byron King
for The Daily Reckoning

P.S. Click the link below to find out about the five publicly traded companies in the Energy & Scarcity portfolio. The stocks all took something of a beating in the first quarter of 2008, along with the rest of the market. But they seem to have stabilized and found their support levels. All of the companies have great management, great “land position” above steam zones and solid business plans. These are all companies for the future. If you bought just one share of each firm today, the whole basket would cost right around $5. Compare that with $125 for a ton of coal.