“Oil prices must be maintained at a level that encourages investment, especially in alternative energy sources.”

Words from Al Gore?  T. Boone Pickens?  Robert Redford?  Nope. They came from Saudi Arabian oil minister Ali Naimi.  See for yourself. http://tinyurl.com/4zhbyc .   OPEC, as characterized by Naimi, is concerned that low oil prices will hurt the push for renewable energy. He gets an A for good politics and good communications, but one might wonder whether he might have his fingers crossed behind his back.

More believable but in a continuum of surprise nonetheless are results from a Deloitte survey of 52 high-level oil and gas executives released last week in which 75% said it was a good idea for the country to turn away from fossil fuels for transportation. http://in.sys-con.com/node/774181

This may give renewable companies, environmental lobbies, climate-change watchers, and people in general more confidence that quickly retreating oil prices will NOT stymie the movement for renewable energy as they did in the late 70s and early 90s.  

What effect does the price of oil have on renewable energy stocks? It seems like a logical assumption that bullishness on the sector would have a direct dependence on the price of traditional (mostly fossil) energy. Charles Morand, in a Seeking Alpha article, looks at research on the subject only to conclude that “there is none” – not yet anyway. The sector is still too young to build into any strong statistical analysis. http://tinyurl.com/4h57wu. 

If an investor were to use the price of oil as a metric for judging the value or viability of cleantech stocks, that might be to miss a key point. The sector is made up of companies that are searching for alternative energy: maybe cleaner, maybe more renewable, maybe easier to control.  Others concerned have goals for energy independence, reduction of greenhouse gases, slowing of climate change, opposition to acid rain or environmental despoliation from mining or slag.  But no one has set out to find alternative energy that is primarily just cheaper. That said, investment in such ventures may have a variety of goals, and usually one of those is to make money.  Obviously it is easier to visualize profits if there is a benchmark to look at, and — for convenience alone — that benchmark has been light sweet crude.  Whether it makes sense or not.

 

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