Energy Investment Opinions by Bill Paul
Jan 4, 2009 – Bill Paul is a former Wall Street Journal energy and environmental reporter with more than 30 years of experience. He recently wrote an article titled, “Stay Ahead of the Energy Curve” for Stocks, Futures and Options magazine. As he has been reporting on energy issues before many of the green energy advocates were born, it is worth reading what he has to say. He starts off by saying that the bad news is that despite the stimulus plan for green energy of President-elect Barack Obama, the global economic slow-down will cause the scale back of capital-intensive green energy projects such as wind farms and utility-scale solar power plants. He doesn’t even mention the cost of the infrastructure to move that electricity from new plants to the electrical grid [see previous posts]. This projected slowdown is in line with prior posts on GreenEnergyForEarth.com. Similarly, the cost of new, multibillion dollar nuclear plants can be expected to be slowed down. He also sees a slow down in the search for new oil deposits north of the Arctic Circle, in deep ocean and in tar sands due to tight credit, increasing costs and decreasing oil prices. Thus, when the economy picks up again in 2010 or 2011, new oil supplies won’t be here and prices will rise quickly. Maybe, that will then stimulate the incentives for renewable energy.
What is the good news? There is a continual increase in the world’s demand for energy. Well, some would say that is not good news. Anyhow, that combined with increasing regulations requiring cleaner energy generation will continue to prod utilities to develop alternative energy sources. Paul targets geothermal and cleaner coal technology as 2 winners. He notes that Google’s director of energy and climate initiatives calls geothermal energy the next “killer app”. Also, the US government has opened millions of acres of federal land for geothermal development.
As we have noted in GreenEnergyForEarth.com energy efficiency provides the quickest return on investment not only for industry, but especially for residences, especially with the 8-year extension of federal tax credits and other state and local incentives for green and efficient energy upgrades.
The transportation use of energy should also benefit from the Congressional legislation of 2008 that provides tax credits for purchasers of “plug-in electric hybrid vehicles” [PHEVs] that are higher than either President-elect Barack Obama or John McCain proposed during the campaign. Don’t expect to see such models early in 2009.
Paul expects the US average price for regular gas to over $3.25 by the summer of 2009 and even higher if a major hurricane threatens or damages oil rigs in the Gulf of Mexico. Paul quotes a University of Maryland study that posits that US consumers are ready to spend $54 billion on PHEVs and hybrid vehicles as soon as the price premium drops to $1,000 per vehicle. That could be quite a boost to the automakers and the economy. The same survey projects that consumers would spend another $50 billion on other green energy efficient products.
Finally, Paul discusses carbon cap-and-trade legislation that he expects to be passed by the new Congress and expects that this will provide a new market place in the USA as it has already in Europe. He states, “Globally speaking, during the next several years, hundreds of billions of dollars are going to be spent by millions of companies to abide by the rules of this new carbon-constrained world.”
Please post your comments and discussions of the points that Bill Paul makes.
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