Today’s business news contains two seemingly unrelated stories, both on the energy front. The first tells the tale of Range Fuels’ foray into cellulosic ethanol, the process of making ethanol fuel, not from foodstuffs but from waste products such as wood chips. Even with government assitance with financing and with a Congressional mandate requiring customers to use their inferior fuel, Range Fuels’ project is a bust, to the tune of $250 million, a good bit of that taxpayer money.
The Range Fuels Fiasco
As taxpayer tragedies go, Broomfield, Colorado-based Range Fuels has all the plot elements—splashy headlines, subsidies and opportunistic venture capitalists. Range got its start in 2006 when George W. Bush used a State of the Union address to extol wood chips as a source for cellulosic ethanol that would break America’s “addiction to oil.” Mr. Bush pledged that with government funding cellulosic ethanol would be “practical and competitive within six years.”
Vinod Khosla stepped in with his hand out. The political venture capitalist founded Range Fuels and in March 2007 it received a $76 million grant from the Department of Energy—one of six cellulosic projects the Bush Administration selected for $385 million in grants. Range said it would build the nation’s first commercial cellulosic plant, near Soperton, Georgia, using wood chips to produce 20 million gallons a year in 2008, with a goal of 100 million gallons. Estimated cost: $150 million.
Fast forward to 2010:
… the EPA said Range would finally produce some fuel in 2010—but only four million gallons, not 100 million, and of methanol, not cellulosic ethanol. So taxpayers have committed $162 million (along with at least that much in private financing) to produce four million gallons of a biofuel that others have been making in quantity for decades. This politically directed investment might have gone to far more useful purposes.
(Click here to access article w/o subscription)
Compare and contrast…
…with the tale of the marketplace. Oil operators, encouraged by the phenomenal success of natural gas in the shale plays, are enjoying better-than-expected success in oil-prone shales:
New drilling method opens vast oil fields in US
Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day - more than the entire Gulf of Mexico produces now.
This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers.
How much of our time, wealth and national security must we fritter away wastefully, relearning the lessons that history has tried to teach us many times over?
Cross-posted at VladEnBlog.
That was quick! Barely had my NYT op-ed on the decline of public stock exchanges hit the web this evening than Ira Stoll was ready with a trenchant reply.
Stoll is sanguine about the fact that the number of companies listed on U.S. exchanges has declined from 7,000 in 1997 to 4,000 today. “Suppose that the number went to 4,000 from 7,000 because many of the 7,000 companies merged with each other to become even larger and more dominant,” he writes, “and that the current 4,000 listed companies have three times the sales and three times the market capitalization they did in 1997.”
Actually, let’s not suppose that and instead let’s look at some numbers. I don’t have sales numbers, but I do have market capitalization numbers, from the World Federation of Exchanges. At the end of 1997, U.S. exchanges had a total market capitalization of $13 trillion; by the end of 2010, that had risen by about 24% to $17 trillion. Which in real terms actually works out as a slight decline in market cap. Meanwhile, GDP grew from $8.3 trillion in 1997 to $14.7 trillion in 2010 — that’s an increase of 76% in nominal terms, three times the rate of growth of U.S. stock market capitalization.
But more broadly, Stoll is making my point for me — that the U.S. stock market is increasingly made up of enormous and dominant companies and features ever fewer of the smaller, fast-growing companies which really drive the economy. When public companies are acquired or delisted or go bankrupt, there’s not nearly enough in the IPO pipeline to replace them. The result is a market of dinosaurs.
I also claim that the market is doing a bad job at allocating capital efficiently — after all, the market hasn’t allocated any capital to Apple since 1981. I don’t for a minute think I have a better idea than Steve Jobs what to do with Apple’s cash pile and in fact have said quite explicitly that it shouldn’t be paid out in dividends. But when investors buy Apple stock, their money doesn’t go to Apple, but rather to the other investors that they’re buying the stock from. The stock market becomes a money-go-round for speculators, rather than a way of directing capital at companies.
Finally, the “ultra-rich elite” I’m talking about is not the broad universe of people who are considered accredited investors by the SEC, but rather the tiny group of individuals who are given the opportunity to invest in private companies. If you’re well connected in Silicon Valley — if your name is Ron Conway or Vinod Khosla — then you have loads of such opportunities. But the rest of us don’t, whether we’re formally accredited investors or not.
I’m not making any policy recommendations in this piece — I don’t think that the rules about accredited investors should be weakened further, or that all Americans have some kind of automatic right to be able to buy a piece of Facebook. But I do think that the public stock market is less important now than it was in the past and that its decline is going to continue in future decades just as it has done since 1997.
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Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
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Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
bench craft company reviews
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
bench craft company reviews
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
bench craft company credit card
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
bench craft company reviews
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
bench craft company credit card
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
bench craft company me
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
bench craft company credit card
Scientists, telescope hunt massive hidden object in space – This <b>...</b>
You know how you sometimes can sense that something is present even though you can't see it? Well, astronomers are getting that feeling about a giant, hidden object in space. And when we say giant, we mean GIANT.
Small Business <b>News</b>: Ladies Make The <b>News</b>
David Siteman Garland inspired this roundup (Thanks, David!) with a post on 35 visionary women entrepreneurs that just happened to include the founder of Small.
Weekly Search & Social <b>News</b>: 02/15/2011 | Search Engine Journal
Hello and welcome back to '7 Days of Search and Social'. Another week, another drama. While I've not looked historically to past years, one does have to wonder.
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