Market Overview

Green Push Takes A Hit

Share:
Green Push Takes A Hit
Related ADM
The Market In 5 Minutes: GM And Gap Earnings, Retail Sales Data
A Peek Into The Markets: U.S. Stock Futures Climb Ahead Of General Motors Earnings
Related LNG
Is The Nat Gas Market Set to Enter A Golden Age?
Jim Cramer Gives His Opinion On American Outdoor Brands And Cheniere Energy

The push for energy efficiency and alternative fuel development over the past five years has taken a major step backwards over the past six months as oil prices fall to new lows. Super-cheap crude has taken away companies’ incentive to invest in alternative options, something that has put natural gas companies and biofuel firms on the list of businesses feeling the pinch.

Related Link: New Biotech ETF From ALPS

Hitting Small Firms

Small firms like Arizona Biodiesel and Blue Ridge Biofuels that convert used restaurant oil into usable fuel have been forced to cut prices in order to remain competitive. With gas stations posting record low prices, consumers are becoming less and less likely to worry about their carbon footprint.

Ethanol Producers Hit

Ethanol producers are likely to feel the pressure of dropping prices this year, too, as corn prices recover and demand continues to slacken. Last year, shares of Archer-Daniels Midland Company (NYSE: ADM) gained more than 16 percent, since the company was able to produce the ethanol with relatively low margins. But persistent price pressure coupled with increasing margins will likely cut into profits this year.

Related Link: Natural Gas Spikes Following Reduced Stockpiles

Natural Gas Companies Hit

Natural gas companies are also feeling the squeeze this year as their customers aren’t seeing the same cost savings for swapping out diesel. Shares of Cheniere Energy, Inc. (NYSE: LNG) have lost 3.36 percent over the past six months, as shipping companies are reluctant to pay a premium for trucks that use natural gas when diesel prices are only marginally higher. A lack of natural gas demand may also hurt KBR, Inc. (NYSE: KBR), as the company produces the industrial equipment used at natural gas plants.

Image credit: Georgia National Guard, Flickr

Posted-In: Arizona Biodiesel Blue Ridge BiofuelsCommodities Markets Best of Benzinga

 

Related Articles (ADM + KBR)

View Comments and Join the Discussion!