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Can Boeing get gutter-oil jet fuel off the ground?

Boeing (BA), along with a Chinese partner, Commercial Aircraft Corp of China, have launched a joint venture with the aim of converting used cooking oil into jet fuel, according to a Reuters. The project will be based in Hangzhou, China and will reported convert 240,000 liters per year of cooking oil into jet fuel. Exactly how much jet fuel one can make from 240,000 liters of cooking oil is really anyone's guess at this point, but the scale makes this look more like an experiment than an industrial enterprise.

Still, conventional wisdom has been that making jet fuel from plant material is either impossible or too expensive to be practical. If Boeing can show that these assumptions are false, it will have a hugely important new technology. If the venture begins to look successful, it should be considered a bullish sign for BA stock. But that's a pretty big “if.”

In China, dirty cooking oil is referred to as “gutter oil” and for the most unpleasant reason imaginable. There is a serious concern in China over criminals collecting used oil from sewers and drains, repackaging it, and selling it as new. Many Chinese have been sent to prison for this offense in the last few years.

One might (but needn't necessarily) conclude that China is just looking for a way to get its gutter oil off the street – literally – and that by helping them out, Boeing just wants to make friends in China, impress American investors, and perhaps score points with environmentalists who see biofuel as the key to world energy sustainability.

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.