As with many other topics, Democrats and Republicans don’t exactly see eye-to-eye on the subject of biofuels. For that reason, biofuel exchange traded funds (ETFs) could struggle under the new look of Congress.
Alan Bjerga for Bloomberg reports that lame-duck sessions, which happen after an election and before a new Congress takes office, tend only to successfully tackle areas in which the parties have lots of common ground. At the moment, Democrats and Republicans don’t agree on the programs, including a 45-cent-a-gallon tax credit for ethanol blenders. [Getting Agriculture Exposure Through ETFs.]
Meanwhile, BP (NYSE: BP) is zeroing in on Brazilian sugar cane and U.S. energy grasses for its biofuel efforts. The move could give the Americas an advantage in the sector, reports Laura MacInnis for Reuters. BP is particularly bullish about the potential of energy grasses, especially in the southeastern United States which is hot, humid and has vast farmlands – all things conducive to growing them.
Governments are going to place more emphasis on renewable energy in countries such as Brazil and Sweden, but will the United States get left in the dust? Kevin Grewal for Daily Markets explains that it appears that biofuels are going to be a significant part of the road transport fuel mix going forward and some ETFs are likely to feel the effects. [Commodity ETFs That Are Beating Gold.]
Among the ETFs that may benefit as the use of biofuels increases include:
- Teucrium Corn (NYSEArca: CORN): Owns corn futures contracts
- PowerShares DB Agriculture (NYSEArca: DBA): Owns futures on a variety of agricultural commodities, including corn
- Market Vectors Agribusiness (NYSEArca: MOO): Holds companies involved in the production of certain commodities
- PowerShares Global Agriculture Portfolio (NYSEArca: PAGG): Holds the stock of companies involved in the farming and production of agriculture
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.