Efficiency in Energy Stocks

The Fifth Fuel

By
Wednesday, January 6th, 2010

I'm a data hog.

It helps me make decisions based on real historical occurrences by finding trends, patterns, and outliers.

When dealing with stocks, I use data to find price ranges so I can advise readers when to buy low and sell high. If you get good enough, you don't even really need to know that much about a company — some volume numbers and a historical price chart will do just fine.

My readers closed dozens of stocks like that last year. Of course, we also find undiscovered stocks based on intense research of emerging technologies, long-term energy trends, earnings analysis and so on... but I digress.

I also use data to make personal decisions, which I then extrapolate to real-world happenings. This also helps me make investment decisions.

At the start of this New Year, I have some fresh full-year data, and some interesting conclusions to share.

My Gasoline Use

Last year, I drove 12,707.5 miles. I used 871.69 gallons of gas. I got 14.58 miles per gallon (MPG).

I spent a total of $1,947.18 on gasoline, paying anywhere from $1.48 per gallon (in January) to $2.74 (in December). The price constantly rose all year, but the average I paid for gas in 2009 was $2.23.

Here's all that data again, compared with my numbers from 2008.

Year

Total Spent

Average Price

Total Gallons

Total Miles

MPG

2008

$2,185.47

$3.09

715.71

10611.3

14.83

2009

$1,947.18

$2.23

871.69

12707.5

14.58

The main takeaway here is that I used 155.98 more gallons of gas in 2009 than I did in 2008. But I spent $238.29 less.

I guess what I'm trying to say is, when it comes to gas use, we're pretty much at the mercy of the market, since prices can swing so drastically. I mean, the average price last year was $0.86 lower than two years ago.

As a country, we didn't have to do anything and we saved money. It's easy to see why you wouldn't want to by a new car just to save a few miles per gallon.

My car is paid off. Why would I pay $26,000 for a new one, even if my mileage doubled? So I could get 30 mpg and use just 423 gallons, paying $944.55 instead of $1,947.18?

I'd save $1,002 in gas costs, but I'd have to pick up a few-hundred-dollar monthly car payment. Plus, my gas costs would go right back to where they were when the price goes back to $3.50 per gallon.

No thanks.

My Home Energy Use

My home consumed a total of 10,834 kWh of electricity and 611 Therms of natural gas. I paid a total of $2,346.30 for those services.

But as you'll see in the chart below, I used 54% less electricity in December than I did in January, and 64% less natural gas. As a result, my bill was $145.62 versus $358.12. Check it out:

Month

Electricity (kWh)

Gas (Therms)

Bill Total

January

1303

114

$358.12

February

1069

132

$345.51

March

960

95

$267.89

April

929

64

$223.91

May

1161

41

$224.72

June

611

26

$97.53

July

705

21

$112.23

August

702

14

$105.44

September

925

16

$126.37

October

1177

19

$201.95

November

695

22

$137.01

December

597

47

$145.62

Annual

10834 kWh

611 Therms

$2,346.30

Now, I did a few things to reduce my home energy consumption this year. That's the reason for the constant decline in my bill.

First of all, I signed up for my local utility's energy efficiency program, Baltimore Gas & Electric's Smart Energy Savers. At no cost to me, they came out and installed a smart switch, made by Honeywell, on my outside air-conditioning unit. This allowed them to cycle my unit during days of peak demand in the summer.

Joining this program also entitled me to an $18.75 credit on my bill for the summer months of June through September.

All this, and I haven't spent a penny.

Thanks to utility deregulation in Maryland, I also signed up for electric supply service from Washington Gas Energy Services. That allowed me to lock-in a competitive rate of $0.108 per kWh instead of the $0.12 per kWh (or more) that BGE was charging. I was also guaranteed 5% wind energy.

Finally, I took some personal efficiency steps. I installed a smart thermostat and programmed efficient settings; I installed CFLs; I bought a tube of caulk and sealed windows, doors, and cracks; and I put a space heater in the bedroom so I could set the heat lower at night.

All this set me back about $200. But as you can see, my bills in the second half of the year were half us much as bills prior, saving me hundreds of dollars. And that will continue for years.

And that's the point I'd like to make here: When it comes to efficiency, making small changes at home has a much greater net benefit than make big changes to your car.

The Fifth Fuel

This is why building energy efficiency is now being referred to as the fifth fuel — after coal, oil, gas, and uranium.

And it's spawning an industry worth at least hundreds of billions of dollars.

I spent $200 last year on energy efficiency... There are 120 million homes in the United States... That's $24 billion right there.

Think of the global scale.

And that's without mentioning commercial buildings, of which there are 5 million in the States. These will cost even more to retrofit — call it $5,000 apiece. That's another $25 billion.

And based on my little experiment, we know these investments will be made because the payoff is worth it, even before figuring in the massive government incentives now on the table.

It's already translating into great gains on the Street. Take a look at the 2009 performance of two efficient lighting companies, a saved energy aggregator, and smart meter provider:

Energy Efficiency Stocks

Some of those companies crested 500% for the year... and only a fraction of buildings have begun to be retrofitted.

I expect this to be a major investment theme again this year. And all of those companies in the chart are still on the table.

But there's one company out there offering an energy efficiency solution that blows all others away. They make a tiny device that reduces energy waste throughout an entire building. We installed it here in the office and immediately saved about 50% per month on our utility bills.

And the stock trades for less than a dollar.

I've just finished my due diligence and you can find all the profitable details in this new report.

Call it like you see it,

Nick Hodge

Nick

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Comments:

Comment by John B on 2010-01-06
Hi Nick.
First may I say weLl done for your articles, content and statistics.
I am a retired Brit, in UK and I find the difference between what you spend on fuels and what we spend.. First I am amazed that you obtain only 14 miles per gallon using petrol. Using diesel you can expect 40 mpg. So why tollerate 14mpg. I use LPG which I pay £2.op per liter for. That is half the price pf petrol over here. I run a Nissan 1800cc saloon obtaining 40mpg on petrol, but using lpg, to equate to petrol, I double the 40 to 80 mpg, due to it being less than half the price of petrol. The benefit of LPG is massive, its cleaner burn, 80%less pollution, 90% less carbon and 20% less CO2. If all the vehicle drivers in America used LPG you would reduce carbon and CO2 emmissions massively.
I know we have very different life styles, but surely it is wise to use efficiency and reduction in toxic emmissions. Your house use of utility fuel is massive so I assume you live in a warm climate and use a lot on air conditioning. You could consider heat exchangers in your home to recover enrgey wasted as heat to keep cool. That heat can be used to drive other appliances.
I must say it concerns me as an individual that most drivers and home users know very little about how to find the best solution about saving money in those areas of expense we use daily.
Best regards.
J B
Comment by Louis Courchesne on 2010-01-06
you fellows are doing an exceptional job at research.I wish I had your talent to make money.You know the old saying money begets money.I enjoy reading all your reports.Lou 5 star on this one
Comment by Don Grey Fox on 2010-01-06
Its all going to boil down to Hydrogen in the end.
Comment by Steven McTiernan on 2010-01-06
What is astonishing in this article is how there was no comment on the fact that he was getting only 14.8 miles per gallon. Get to European levels of gas mielage and the energy problem goes away. I get 38mpg from a mid sized diesel SUV in London. 14.8 mpg is ludicrous.
Steven McTiernan, London, UK
Comment by Chuck S on 2010-01-06
One thing that's needed is honesty about how much energy is actually saved by various things. For example, I think many Priuses use more energy than they save because of the energy to make the big generator, battery, and electric motor. I think honest public service announcements about these things will help a lot.

This has been happening to some extent forever. I remember maybe 20 years ago they replaced all the florescent balasts at my job for higher efficiency. Before most of us were born, most businesses changed to almost all florescent lights.
Comment by Terence Roe on 2010-01-07
Hi there Nick,

It is great to come into contact with somebody who cares about the welfare of his fellow men; someone who puts himself out to really do something about making earth-life a lot less stressful to live. A lot of what you are sharing is pure unadulterated wisdom of the highest order; this meaning plain and simple common sense. To sum it all up; to be contented with having everything we need, using common sense to enjoy all the benefits to the full, would save this sick world from the crisis situations that regularly keep cropping up, which make even the wealthy tremble. What would God's answer be to the man who wailed & complained about having had only everything that he had need of; this during his short physical training and testing visit to planet earth? I would just love to be secretly listening in to hear God's true & simple, life-changing response, which, I believe, would apply to all men; this without any exception! Maybe a few comments on this would help to promote some interest in this vitally important but very sadly neglected subject.
Comment by Brian H on 2010-01-07
There are many currents in the energy ocean, and some may carry Black Swans.

Efficiency: TeslaMotors has 2 cars, a $110K sportscar (900+ on the roads) and a $55K sport sedan (for delivery late 2011, 2,000 pre-sold) which get over 200MPG equivalent, with ranges from 160-300 miles, and electronically limited top speeds of about 125 mph. The "mpg" numbers are based on cost-matching of electric vs. gasoline power for the same distance, more or less.

More speculative, my hope and expectation is that in 4-7 yrs. there will be a roll-out of a prefab garage-sized fusion generator package for licensing world-wide, which will have an all-in power cost of >0.5¢ (~0.3p) per kwh. This is a gargantuan Black Swan, and will rewrite every energy-using production and consumption activity budget on the planet, which is almost all of them.

Also, no emissions, which will render the CO2 hoax moot. And the COP15 and similar power grabs will sink without a trace.

Check out focusfusion.org, if you're interested. (Site under renovation, but usable.)
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