I've been attempting to teach an old dog new tricks lately, and I can confirm that the old adage is tried and true. But Valero Energy
Beating out ethanol giant Archer-Daniels-Midland
I must admit, I have little regard for corn-based ethanol as a fuel source. Last year's enormous surge in corn prices alone was enough to convince this Fool that having humans and cars competing for the same fuel source can't possibly end well.
Alternative energy was a hot topic in the CAPS blogs last summer when oil prices surged, and the case against corn-based ethanol was convincingly argued through some excellent posts. Oil refiner Tesoro
Corn continues to trade above historical price levels, and gasoline demand remains depressed, making the business of ethanol production tenuous at best. Aventine Renewable Energy Holdings
Despite the obvious shortcomings of corn-based ethanol, the government seems to have assured steady demand for it and other biofuels. New regulations require 11.1 billion gallons of renewable fuel to join the nation's fuel supply this year, increasing to 36 billion gallons by 2022. Given those standards, and Valero's expectation for additional requirements in the future, the purchase of these assets at distressed valuations could prove strategically significant.
With integrated producers like BP and independent refiners like Valero paving the way, I see giants like ConocoPhillips
More than 4,100 CAPS members, including 1,025 All-Stars, expect five-star pick Valero to outperform the S&P 500. Will you follow the Fools, or blaze your own trail? Join the free CAPS community today and share your own thoughts about Valero.
Fool contributor Christopher Barker is all for alternative energy sources, but thinks food is best utilized as food. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Valero Energy. The Motley Fool's disclosure policy is processed from the cellulosic remnants of sugarcane bagasse.