CGCA Blog Post Published By SmallCapSentinal.com
June 22nd, 2009 at 9:29 am Posted by The Dean
I just stumbled upon a blog entry written by Kris Davis @ SmallCapSentinal.com and I i’d like all students to add this CGCA reading to your homework today. The original article has been taken from HERE and I have also copied/pasted a version below for all students:
————————————
Are Oil Prices, Uranium and Alternative Energy the Real Winner in Iran?
By Integrity Media – June 18th, 2009
By Kris Davis
With the elections results “official” in Iran, the markets could see the recent increase in oil prices continue their trend.
There was optimism the week prior to the elections that Ahmadinejad might suffer an unexpected, albeit welcomed loss to rival Mousavi. The western world has been keeping a close eye on the unstable leadership of this oil rich country for years and this election could have been a pivotal turning point from a political position, but nevertheless, I believe it was still critical from a financial view. Regardless of who is the “face” of Iran, the true ruler is the Ayatollah, who enjoys almost unlimited power. However, a change of this magnitude could signal a shift in the countries desired direction. Given the rampant inflation and high unemployment, an almost unthinkable change looked possible.
Unfortunately, it appears change was not to be unless the indomitable crowds of Mousavi supporters somehow win out or the Ayatollah capitulates and orders a new election. I’m still not sure how ‘new elections’ with the same leadership operating them could generate a different result. Having a thief count your money is never a good idea. My guess is if there are new elections (giant IF) there will be another Ahmadinejad victory with a more narrow result and the current government will champion their openness to criticism anew.
I could go on and on about the geopolitical issues that will arise from these results, all of which influence the price of oil. Instead of focusing on what could have been, I want to look ahead to what will likely be.
Iran is one of the world’s largest oil producers, yet their production capacity is only at a third of its capability due to outdated equipment and technology. A change in regime would have probably given western oil companies the go-ahead to do business in the country. This loss is equivalent to an estimated 4 million “unproduced” barrels of oil daily. This expected future production would have surely brought the price per barrel down.
Even though oil could see a pull back, long term the demand factors are in place to easily keep it at current levels. Without significant increased production or additional and substantial finds, there is no conceivable way that demand won’t outpace production.
All this points squarely to alternative energy sources.
Natural gas, Solar and Wind power are all getting their fair share of attention, and rightly so. All have huge potential and are considered clean and renewable.
Natural gas has enjoyed a major role in heating, but has yet to transition to autos, largely due to infrastructure issues (or a lack thereof).
Solar has recently become profitable for a few companies and the buzz is just beginning. However, there are many lagging issues including portability and storage, which are also affecting wind power’s efficacy.
I am all in favor of searching for new clean sources of energy, but I also think that we should maximize those already available to us and those that aren’t reliant on foreign supply. We need to stop sendiing billions of dollars to unstable countries that seek to do us harm. One technology that has been proven to work in other countries and is currently working in ours is nuclear power.
I was extremely pleased when Republican Mike Pence introduced a bill to the floor that called for 100 new nuclear reactors to be built over the next 20 years. Nuclear power plants do not pollute the air or produce greenhouse gases. Most nuclear plants are very economical to run; with average production costs slightly lower than costs at coal-fired power plants and much lower than those at oil- and gas-fired plants. There are currently 103 reactors operating in the U.S., located at 64 sites in 31 states which produce 20 percent of the country’s electricity yet it had been since 1978 since a new reactor was built. The Three Mile Island incident sparked fear and controversy that ended up burying the possibility of a new plant under a mountain of political red tape.
With the economy on the mend and oil on the rise, alternative energy is sure to make headlines with increasing frequency. Although Obama isn’t a staunch advocate of nuclear power, I think a continued price rise in oil could turn his ambiguous view into a favorable one. Relief could have come through a change in Iran but that looks unlikely as I’ve stated herein.
True, it does take years to construct a new plant, but any solution will take time. As a taxpayer, I feel that the billions my government has borrowed for “stimulus” should be used in part on proven energy sources.
Demand for energy will continue to rise as the world recovers and emerging countries like China, India and Brazil will become larger consumers in an already tight market. If we expect to keep not only our economic dominance, but independence, we must lay the foundation now.
I truly hope that solar power and wind technologies will be the energy of the future and that the U.S. will lead the way. However, that future could be decades away and might never be a viable and efficient fuel. Look at ethanol. It takes 2,500 gallons of water to produce 1 gallon of corn ethanol.
Nuclear isn’t the only answer for clean and efficient energy, but it is the only option that we know works.
Some say using nuclear power is irresponsible, but the real irresponsibility lies in the hand of our elected officials if they choose to risk our country’s future energy independence on unproven technologies.
Banking on future technologies is eerily reminiscent to home owners taking out larger mortgages than they should, relying on an increase in income and value.
I can only hope that the lessons learned during the recent financial crisis will carry over to the energy debate. A lot more than money is riding on this.
————————————
SmallCapSentinal.com has received compensation for issuing the CGCA report above and its just a small part of a much larger marketing campaign. For instance, check out http://cobrapick2.com and check out the disclaimer: “[CGCA] was chosen to be profiled after Economic Advice had completed due diligence on the stock. Packet Portfolio, Ltd. has been paid $150,000 for this advertising effort.”
$150,000 is a lot of money to spend on any internet marketing campaign and I believe a lot more investors will learn about CGCA in the weeks ahead so please do your homework on the stock before thousands of other penny stock investors learn about CGCA, Friday’s news release and the substantial marketing campaign.
