According to the AAA Daily Fuel Gauge Report, “Average U.S. gasoline prices rang up at $1.84 a gallon on Tuesday, up from $1.67 a gallon a month ago.” That certainly is a far cry from the $4 plus a gallon that we had 7 months ago. Funny how those championing alternative energies have gotten awfully quiet.

What does all this mean? Once again Crude is king and it’s going to be really hard to knock it off the throne.

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The Israeli Ministry of Finance should be applauded for sticking to its guns and wanting an energy policy that generates revenues and not dishes out subsidies.

It’s not that I have anything against alternative energies, after all I support the ultimate alternative energy, Nuclear power. It’s just that if these technologies are so wonderful why do they cost more and demand government subsidies to get them up and running? If they were so good couldn’t the private sector fund these projects entirely and make all the profits? Oh profits, you mean there aren’t any?

According to the report in Globes, the Ministry of National Infrastructures director general Hezi Kugler spoke at a conference and said: “The Ministry of Finance wants us to stop and assess the economic gain that alternative energies are likely to generate. Surveys in other places show that the public is willing to pay 20-30% more for alternative energy. We can supply energy from the resource that we have here (the sun) and increase our energy security. These are the right considerations. Unfortunately, the Ministry of Finance is doing everything it can to stop this going before the cabinet because they know there won’t be a single minister who will vote against it.”

Clearly the Finance Ministry is unreasonable in wanting to ‘assess the economic gain that alternative energies are likely to generate.’  Mr. Kugler, give me a break. First of all, you tell me who would be happy to pay an extra 20-30% for their energy? I wouldn’t be happy to part with that money, and I don’t know many others who would be doing cartwheels to pay a lot more either. Second, do you actually have the nerve to see it as being unreasonable that the Ministry of Finance wants to see if there will be any actual economic benefit from this whole project?

The Finance Ministry deserves a lot of credit on this issue in protecting the Israeli taxpayer from being burned by the alternative energy hype.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Not that I enjoy saying bad things about my hometown of Seattle, Wa. but when it comes to politics, most residents of the city are just plain nuts. It’s no wonder that the largest city in a state that was once dubbed, ” the 47 states and the Soviet of Washington,” is so far off to left that even great news, can be spun into catastrophe. That’s exactly what happened in yesterday’s Seattle-PI. In a very telling headline the question is asked, “The Money Squeeze: Is cheaper gas bad news?”

Huh?

What a stupid question. Of course it’s good news, if consumers can save 30% of their gas bill, can you explain to me why that’s bad?  I know it’s bad for environmentalists, and all those who drink the Al Gore Kool-Aid. After all it just goes to show that crude-oil is king, and alternative energy sources like  wind, solar, fully pumped tires, are all prohibitively expensive and fall by the wayside as crude prices fall. What happened to the whole alternative energy craze?  Funny what $65/barrel oil can do!

According to the PI article: ” When prices at the pump surged this summer, maintenance technician Taylor Morgan decided to change the way he got to the downtown Seattle office building where he works. He started taking a bus from his South Seattle home a couple of days a week. And he told his wife that the bimonthly trips to see family in British Columbia had to be cut to once or twice a year. On Friday, Morgan said he was happy to be driving his Honda Accord to work every day again. He stood pumping gasoline at a 15th Avenue West Chevron station, where the price for regular had dropped to $2.99 per gallon.

“Things are getting back to normal,” he said. “But with the crazy price changes, you can’t really be sure. It’s really confusing.”

Morgan and other baffled consumers are far from alone. With markets exceptionally volatile, even the region’s top economists can’t say whether gas prices will continue to fall or rocket again.”

Excuse me. What’s confusing about gas prices dropping rapidly? Why is it an issue if economists can’t predict the future? I don’t hear anyone crying over the fact that 6 months ago most ‘economists’ where predicting $5 per gallon. Nice call!

Heck, maybe just maybe the cheaper oil will mean salvation for the near bankrupt US car industry. Instead of another government bailout, maybe cheaper prices at the pump will help jump-start new sales.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Rumors are swirling in the Israeli press that Ormat Technologies (ORA), a leader in geothermal energy, is about to close a large M&A. These rumors are based on an article in Power, Finance and Risk, which is reporting, ” Geothermal developer Ormat Technologies is on the hunt for strategic acquisitions and is working with Lehman Brothers to do so. The company has reportedly looked at a few targets but nothing has yet come to fruition.” The article continues, “Targets on the geothermal side are scant, but one Ormat is said to have chased is Salton Sea, an inland saline lake in Imperial Valley, Calif., with some 500-600 MW of geothermal potential.”

The rumors are that they will offer around $1.1 billion for the Salton Sea project, which will increase Ormat’s output by about 80%.

Funding the acquisition could be another problem. The company, as of 3/31/08,  had about $30.7 million in cash, and in May they sold 3.1 million shares for about $149.6 million. This means that they are going to have to take on a sizable amount of debt to complete an acquisition of this sort.

This move will help placate some large shareholders like Haim Katsman (no relation), who have been pushing for the company to get more aggressive in expanding.

I guess the question is whether taking on such large amounts of debt, is worth the expanded output? I guess only time will tell.

Disclosure: Author’s fund has a position in ORA, he has no position in any other stock mentioned as of 8/04/08.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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