2 Charts Tell You Everything You Need To Know About Alternative Energy
StreetAuthority | Apr 11, 2012 01:47AM ET
Just a few years ago, alternative energy sources were all the rage. A booming economy and record-high oil prices meant that the market had the capital and motivation to look into wind, solar, geothermal, biofuels -- even rain or ocean tide currents to create energy. A rising stock market and a high tax revenue base meant plenty of capital for start-ups to build wind farms and for the government to grant generous subsidies to help get new plants off the ground.
This momentum came to a screeching halt with the bursting of the housing bubble and ensuing credit crisis.
The peak nearly coincided with Texas oil baron T. Boone Pickens's lofty goal of building a giant wind farm in his home state. He announced his ambitions in July 2008, when oil prices had peaked during the previous month at close to $150 per barrel, yet halted them a year later when they fell dramatically, bottoming out near $30 per barrel in early 2009. This, of course, speaks to the necessity of high oil prices to help encourage alternative energy projects.
Since then, oil prices have been volatile again and just recently rose above $100. So the question is, after a multi-year period of alternative energy being "dead money," should investors be looking at alternative energy once again?
In today's economic and political environments, it's extremely difficult to sound a bullish tone on alternative energy investments. The plummet in price of the Market Vectors Alternative Energy ETF (NYSE: CHK ) are also questionable near-term investment candidates. Their long-term potential is much more positive, though.
By Ryan Fuhrmann
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