What are the possible long term impacts of a substantial change in the price of oil on the prospects of companies that are in the business of alternate energy…especially solar companies? Any opinions are much appreciated. Thank you.
C’mon, really? If oil goes to $500/barrel, people will spend lots of money on alternate energy…
Even if it stays low I think now the govt will increasingly spend more on alt energy.
But it will be difficult to assess which alternative companies might become the best investments. “Look at automobile and airline companies as examples” (taken from Warren Buffet’s biography)
true, I like the leaders in the industry. As a newer growth industry I think the capital these companies can receive will only continue to boost them, FirstSolar, QCells, etc. I know its hip to find that little known company but if I was going to play it those would be the ones I would peek at first.
What if price of oil went down…how would that impact these companies?
chintz Wrote: ------------------------------------------------------- > What if price of oil went down…how would that > impact these companies? I think the point is moot as the price of oil will only go up and up over the long term. I’d be shocked if it wasnt at 200 in 5 years.
although naive, i’ll directly answer your q chintz… there would be some consolidation as the rampup wouldn’t be as quick as first expected. smaller companies would go bankrupt or get chewed up by the majors, although I suspect the former is more likely.
Oil is depleting. End of story. High prices are just an added impetus for a long term solution. Many governments have programmes specifically to invest in sustainable alternative energies. The election of the new US president has been seen as a boost for solar stocks. This demand will set the price of solar stocks more than anything else. The technology is nearly there for low cost mass production to use in numerous applications but there are a few obstacles to overcome still. But that is just a matter of time.
why are people just looking at a correlation with the oil price? despite the oil price is down people should rather bear in mind that we have renewable portfolio standards and ITCs/PTCs in the US and quota systems and fixed feed-in tariff systems in Europe. Renewable market is rather triggered by regulation and not so much by the oil price
Muddahudda Wrote: ------------------------------------------------------- > Oil is depleting. End of story. High prices are > just an added impetus for a long term solution. > Oil is depleting, I guess, but there’s an absolute ton of it out there. If we’re willing to pay $200/barrel the world is dripping in oil in oil sands, shale, deep water, etc… Unfortunately, I think that the world would survive just fine on $200/barrel oil and people would still drive Escalades and Hummers. With $200/barrel oil, it probably costs a Hummer driver $7000/year to drive their beast. That’s around what they are paying to lease the thing. > Many governments have programmes specifically to > invest in sustainable alternative energies. The > election of the new US president has been seen as > a boost for solar stocks. This demand will set the > price of solar stocks more than anything else. The > technology is nearly there for low cost mass > production to use in numerous applications but > there are a few obstacles to overcome still. But > that is just a matter of time. I hope so…
Alternative energies will be part of the mix even if oil is relatively cheap, and it looks like governments will be trying to increase the use of alternatives (to combat global warming) by using subsidies and other policy tools. If the price of oil goes up, the alternatives share will increase more rapidly. So really we’re talking about how oil prices affect the growth rate of alternatives, rather than whether the companies would exist or not. Without rapid growth, there would probably be consolidation in the industry (good point made above, I hadn’t thought of that). However, my guess is that the fact that different technologies are still evolving may make it structurally more of a consolidation by holding company rather than consolidation by company integration.
Alternative energies will be part of the mix even if oil is relatively cheap, and it looks like governments will be trying to increase the use of alternatives (to combat global warming) by using subsidies and other policy tools. If the price of oil goes up, the alternatives share will increase more rapidly. So really we’re talking about how oil prices affect the growth rate of alternatives, rather than whether the companies would exist or not. Without rapid growth, there would probably be consolidation in the industry (good point made above, I hadn’t thought of that). However, my guess is that the fact that different technologies are still evolving may make it structurally more of a consolidation by holding company rather than consolidation by company integration.
Having said all that, the proportion of alternatives as a slice of the energy pie is still absolutely miniscule in comparison to oil & gas. Theoretically there should be a long way before consolidation begins as alternatives market share has a lot of room for manouevre. But hey, we’re in a market for strategic corporate buyers, so it could benefit from that anyway.