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- High oil prices dont have much impact on alternative energy investment –stock price simulation proves
Answers toAT: Renewables TurnHigh oil prices don’t create a transition to renewable energy –alternative cheap fossil fuels discourage transitionPolczer 11 [Shaun Polczer, Center for Global Energy Studies: Renewable energy still too expensive, says report, http://www.cges.co.uk/media/articles/2011/04/07/renewable-energy-still-too-expensive-says-report // Accessed: July 6th 2012 // BP] Despite high oil prices, fossil fuels will continue to trump renewable energy sources such as solar and wind power without massive government subsidies, a new investment bank says. A report by Calgary-based AltaCorp Capital says the “economic realities” of oil and natural gas mean that the world will remain largely dependent on non-renewable energy sources for the foreseeable future. Author John Mawdsley said he didn’t set out to make a case for oil and gas, but found that hydrocarbon fuels are by far the most cost efficient on an energy equivalent basis compared to solar, biofuels and wind power. “We didn’t have any particular bias, but we were surprised by some of the things we found,” he said in an interview. Despite massive government subsidies, so-called “green” energy such as wind, solar, and biomass accounts for about four per cent of global energy consumption. On an barrel of oil equivalent basis, an equal amount of solar power would cost about $450 a barrel even after factoring carbon dioxide costs of about $50 per tonne — which Mawdsley noted is more than double the current price of emission credits in Europe and three times higher than the Alberta government’s $15 per tonne levy on emissions. In that context, expensive oil sources such as the oilsands remain relatively cheap. “Due to the practical and economic realities, we believe high oil prices are here to stay, which will continue to make Canada’s conventional oil and oilsands companies attractive investments.” There are also ethical considerations. Even though corn-based ethanol and soya biodiesel are cheaper than nuclear power and coal-fired electrical generation, Mawdsley notes that the amount of land under “fuel cultivation” in the U.S. is enough to feed 150 million people. Electrical cars might reduce tailpipe emissions, but could be considered “coal-fired” if they increase demand for dirtier burning electricity. “There are trade-offs,” he said. AltaCorp. is the new investment bank and research house formed by Tristone Capital founder George Gosbee late last year. The firm, which is partially owned by ATB Financial, has a mandate to invest in emerging Alberta companies in the areas of energy, alternative energy and agriculture. Mawdsley said the comparison highlights the economic disparities between energy sources, but also the opportunities for innovators to reduce the gap on some of the higher cost energy sources. The report also notes the “tragedy of the hydrocarbons,” where cheap oil and gas discourages a transition to cleaner fuels. “The tragedy lies in the reality that people will continue to use and deplete the non-renewable hydrocarbons even though it is not in the best long-term interest of the individual society, mankind or the planet for this to continue.” But some observers argue that higher oil prices are already prompting the shift to cheaper alternatives and altering consumption behaviour. Oil hit fresh 30-month highs on Wednesday, rising as high s $109.15 before settling at $108.83, up 49 cents on the day. European-traded Brent continues to remain above $121.Despite a report from the U.S. government showing a two million barrel stock build in U.S. inventories, the price gains came amid continued conflict in troublespots like Libya and Yemen and higher demand estimates from China. Speaking at a conference in London, former Saudi Arabian oil minister Sheik Yamani said oil could hit $200 to $300 if unrest spreads to the world’s largest oil producer. “If something happens in Saudi Arabia it will go to $200 to $300. I don’t expect this for the time being, but who would have expected Tunisia?” Yamani told Reuters on the sidelines of a conference of the Centre for Global Energy Studies (CGES) which he chairs. “The political events that took place are there and we don’t expect them to finish. I think there are some surprises on the horizon.” High oil prices don't have much impact on alternative energy investment –stock price simulation provesHenriques and Sadorsky 07 [Irene Henriques and Perry Sadorsky: Oil prices and the stock prices of alternative energy companies, http://www.sciencedirect.com.proxy.lib.umich.edu/science/article/pii/S0140988307001399 // Accessed: July 8th 2012 // BP] There are several important factors, like energy security issues and environmental concerns, shaping the interaction between business, society and the environment which should generate a positive business environment for companies engaged in the production and distribution of alternative energy. Although this bodes well for the industry in the long run, a better understanding of the relationships between oil prices and financial performance of the alternative energy industry is critical to understanding the development of the alternative energy industry in the years to come. In this paper, a four variable vector autoregression model is developed and estimated in order to investigate the empirical relationship between stock prices of alternative energy companies, technology stock prices, oil prices, and interest rates. Granger causality tests show that even though the model is estimated over a relatively short time period, movements in oil prices, technology stock prices, and interest rates each have some power in explaining the movements of the stock prices of alternative energy companies. Simulation results show the stock prices of alternative energy companies to be impacted by shocks to technology stock prices but shocks to oil prices have little significant impact on the stock prices of alternative energy companies. These results add to a small but growing literature showing that oil price movements are not as important as once thought because investors may view alternative energy companies as similar to other high technology companies. These results should be of use to investors, managers and policy makers. Investors in technology have a wide array of products to choose to invest in from entertainment oriented devices that easily appeal to large numbers of consumers to new energy supply products. One day alternative energy companies could be seen as mainstream energy companies but at the present mass adoption of alternative energy is still too far off and uncertain. In the case of electricity generation in the United States, for example, 71% of energy sources come from fossil fuels (50% coal, 18% natural gas, and 3% petroleum), 20% from nuclear power, 7% from hydroelectric, and 2% from renewable sources (wind, solar, biomass) (Economic Report of the President, 2006, page 252). Consequently, alternative energy companies are seen by investors as potential disruptive technology providers and while the potential returns from investing in the alternative energy industry are high so are the associated risks. Governments can help to bring alternative energy products to market by having a clear and supportive alternative energy policy, and a fiscal policy that taxes carbon and subsidizes alternative energy. Government can also boost demand by being early purchasers of alternative energy related products. Higher oil prices don’t lead to alternative energy investment –leads to more dramatic and heavier fossil fuels to supply the petroleum demandHamilton 11 [Tyler Hamilton, writer for Toronto Star, Clean Break: Higher oil prices aren’t leading to higher clean energy investments… sadly, it’s quite the opposite, http://www.cleanbreak.ca/2011/05/26/higher-oil-prices-arent-leading-to-higher-clean-energy-investments-sadly-its-quite-the-opposite/ // Accessed: July 8th 2012 // BP] There’s been a lot of investment and deployment in renewable energy technologies for power generation and for displacing petroleum products, but as far as we’ve come over such a short time, and as much as triple-digit oil prices are helping to accelerate the transition, the disturbing fact is that higher-priced oil is leading to dramatically more investment in dirtier, harder to access and riskier to extract heavy oil. So while we may be experiencing the beginnings of “peak” conventional oil we’re also seeing the word “conventional” being refined to include heavier crude, starting with the oil sands and now moving toward oil shale and heavy oil trapped in aging oil fields of the Middle East. My Clean Break column takes a closer look at this issue and comes to the conclusion that higher fossil fuel prices alone won’t wean us off fossil fuels, it will only make us go for deeper, heavier and more remote resources in an effort to feed our petro addiction. The answer is to put a meaningful price on carbon, impose stricter environmental regulations and eliminate unnecessary incentives for the oil industry. Sadly, we’re heading in the wrong direction and there’s no sign in Canada or the United States of the political will, or public pressure, required to shift course. What we’ve seen so far is window dressing. George Monbiot raised this issue in one of his recent columns. He cited the fact that Fatih Birol, chief economist of the International Energy Agency, revealed in late April that crude oil production peaked in 2006. Yet the global economy didn’t collapse as predicted. Why not? “The reason, as Birol went on to explain, is that natural gas liquids and tar sands are already filling the gap,” Monbiot wrote. ”Not only does the economy appear to be more resistant to resource shocks than we assumed, but the result of those shocks is an increase, not a decline, in environmental destruction.” The problem, Monbiot continued, isn’t that we have too little fossil fuel but too much. “As oil declines, economies will switch to tar sands, shale gas and coal; as accessible coal declines they’ll switch to ultra-deep reserves (using underground gasification to exploit them) and methane clathrates. The same probably applies to almost all minerals: we will find them, but exploiting them will mean trashing an ever greater proportion of the world’s surface.” We’re letting it happen. Until we stop letting it happen, things will continue as they are, despite talk of peak oil and despite rising oil and commodity prices. High oil prices and renewable energy relationship is not linear –solar and wind tech fluctuate on natural gas, not oil pricesFidelity 11 [Fidelity.com, Viewpoints: Energy: time to invest in alternatives?, https://www.fidelity.com/viewpoints/alternative-energy // Accessed: July 8th 2012 // BP] Davydova: In general, rising oil prices have provided a positive as a backdrop for the renewable energy sector. The most direct beneficiary has been the biofuel sector, although it is important to pay attention to the input cost fluctuations for the sector as well — for example, corn and sugar prices. Indirectly, high oil prices may draw political attention to energy security and energy independence, which has benefited solar and wind, even though they are not direct substitutes. However, I would be careful not to jump to the conclusion that high oil prices necessarily mean stronger performance for renewable energy stocks. For example, many investors expected solar and wind to perform well on high oil prices. While high oil prices certainly help sentiment towards alternative energy resources, it is important to keep in mind that solar and wind technologies are used to produce electricity, and most of the electricity in the United States is generated by coal and natural gas — not oil. U.S. natural gas prices have remained at depressed levels despite higher oil prices globally, making solar and wind less competitive in the U.S. What's more, the price of solar modules and wind turbines has been declining globally, due to unfavorable supply and demand dynamics despite higher oil prices. These are the kinds of cyclical factors you have to be aware of in each sector. Directory: files files -> Answer True False 2 points Question 2 files -> Integer programming and game theory files -> 4 Integer Programming files -> Bpa vehicle Window Repair Scenario #1 task: Procure vehicle window relacement. Objective files -> Pop Warner History files -> North Carolina Inclusion Initiative Mapping Where Children with ieps are Being Served Purpose files -> Fall 2013 Spring 2014 Program Data: Standard 1 Exhibit 4d files -> Hanban – asia society confucius classrooms network 2010 request for proposal files -> Northern England’s set-jetting locations Download 0.73 Mb. Share with your friends:
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