The high price of fossil fuel makes it quite easy to spend money on alternative sources of energy. historically, whenever the cost of oil rises so does interest in breaking the conventional energy trap. We are well aware of the drawbacks associated with imported oil and out of country energy dependence. Likewise, when the cost of energy subsides, so too does our fretting about our cost of driving the oversized SUV’s we so covet in North America.
When the price of a gallon of petroleum rose to over four dollars, it seemed to be a benchmark that caused rationality to come back into play and people stopped buying the gas guzzlers. Nevertheless, crude is going for fifty percent of what it had been at so are we excited about alternate forms of energy now. The information available shows that the association will carry on.
The energy indexes that track renewable energy stocks globally rose thirty six percent from the beginning of April to the end of June, far outdoing the fifteen percent improvement on the S&P 500, based on data revealed recently by New Energy Finance, a research group based in the UK.
The cost of oil rose more than twice as much from February to late June and hit a record high of $70.00 per barrel. Certain experts are forecasting an economic about face that could start prior to the end of the year. This is due to stronger banking institutions and a healthier housing sector. That would bring an increased call for oil and probably a tighter source of supply.
The NEF data placed responsibility for the upswing in the energy indexes to the reduced oil costs of last winter and an optimistic outlook from billions being poured into stimulus programs internationally as well as green revolution plans globally. These will stimulate sales and produce high yields for the renewable energy sector for the next few years.
The turnaround belies the NEX indexes production during the most difficult of economies in generations. The first quarter of ’09 saw the index recede by nine percentage points and the last quarter of ’08, it dropped thirty six points. Over the course of the whole year of 2008, it fell sixty on percent.
The elevated price of oil has sparked investor interest I the clean power stocks but this was not the only contributing issue. Some major countries economies dedicated $162 billion to renewable energy stimulus agendas since last fall.
The unconventional energy industry was knocked around more by a poor economy than from a reduction in oil costs. Stimulus financing has aided in persuading some investors to move forward but there are hurdles to overcome. Quite a few companies are bleeding money, so any tax credits have little impact. However, investment may come down the road as the government shifts to green energy away from conventional energy sources. They see a future in low carbon energy production.
The US administration needs to execute a tax on oil and petroleum now when the cost is relatively small so they can carry alternative energy supplies and transportation systems. When the cost rises, the taxes could be repealed.
If people could understand the connection between the new tax and the benefits they got in transportation systems that were advantageous to them perhaps, folks could be persuaded to live with a new tax. When money is spent overseas on energy supplies, it is dollars not being spent within the national economy and on occasion, this money only makes our enemies more powerful. Changes will require some time but they need to be unscathed by the to and fro of the market.
Federal governments internationally are becoming vital partners in the realm of renewables and the stimulus packages are acting as a lifeline to maintain some semblance of stability in the economy and markets. The credit market is returning, albeit slowly, but it is still more impactful than the cost of oil. The industry is strong due to some very capable technologies that are becoming available and they only need to be able to get there projects funded.
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