The AFR reported today that petrol prices in Australia are headed to $1.10 a litre.
The Venezuela crisis is far from over, and the Iraq crisis is yet to begin. OPEC's published intention to increase oil production to compensate for the Venezuela short fall needs to be viewed in perspective. For oil to get to the US from Venezuela takes a week, whilst equavalent supply from Saudi Arabia takes three months. Up to 40% of American oil needs, are supplied by Venezuela, and pressure is now building in the US for the release of the strategic oil supply reserve.
What does this all mean? Simple. Restricted supply, increased price.
In Australia, the federal government has approved the inclusion of ethanol additive to petrol sold at the pump. Certain states (NSW for example) allow for up to 20% ethanol additive. Ethanol, compared with fossil fuel, is environmentally friendly plus ethanol is manufactured in Australia, from among other ingredients, Australian sugar, hence there is a substantial saving in foreign exchange. The jury is still out regarding the wear differential to the internal combustion engine, when pure petrol, compared with pertol/ethanol mixture is used.
Indcor, a company listed on the Australian Stock Exchange has both the intellectual property and the manufacturing facility for the production of ethanol.
When the investing public becomes aware of this company, it is possible that the share price, currently at very attractive levels, may show some attactive gains.
I believe that this company will be one of the stand-out stocks of 2003.
