Alternative Energy Stocks and the BP Oil Spill Disaster – what investors need to know.

It would seemingly be safe to presume that alternative energy sources such as biofuels, wind and solar would have benefited greatly from the BP oil spill disaster.

The fact is though that this has yet to happen. Alternative energy stocks have on the whole performed rather badly this year, and there has been no noticeable improvement since the explosion on April 20th.
There are two main factors here. Firstly, many investors are still wary about the viability of alternative energy stocks, and with the price of oil remaining low, there is still no reason to rush into alternative forms of energy.

When the price of oil does peak, as it did in the summer of 2008, then interest in the alternative energy sector increases considerably. It seems that the price of oil is much more important than an oil disaster in determining how the alternative energy sector performs at any one time.

The Gulf oil spill was and still is a massive story and environmental disaster, but it does not have much to do with alternative energy share prices. It has had minimal impact on the price of oil, as there are about 300 producing wells in the Gulf, and one of these exploding has had almost no effect on global supply or global consumption.

Alternative energy stocks suffer mainly due to the fact that technologies such as solar power still struggle
to compete with traditional fossil fuels, and this perception negatively impacts the sector.

Most types of alternative energy technology is still developing, and as a result many investors, particularly those looking for more short term gains feel that the perceived risks versus the rewards of the alternative energy sector remain too high. Some of the most prominent companies within the alternative energy sector are small-cap companies. Such companies are typically associated with high risk, volatility and uncertainty.

So, apart from a rapid increase in the price of oil, what does the alternative energy sector really need? The answer is government support. This sector is very reliant on political support, via incentives and subsidies. Increased cash grants – some real money, is what the American alternative energy sector really needs. Commitment to the sector on the part of the government would give investors more confidence that alternative energy stocks are a good long-term investment.

In the U.S, things have improved considerably since Obama came into power, however the alternative energy sector is still not funded anywhere near to the degree that it is in many European countries, such as Spain and Germany.

Despite the current problems, and whilst in American to this day the alternative energy market remains fairly small, it is clear that its potential is limitless, and sooner or later a lot of people are going to be making a lot of money from alternative energy stocks.

To find out more, go to:
whitehouse
greenchipstocks

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.