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Alternative energy prospects in relation to oil crisis

Energy prospects in relation to oil

Sharp fall of oil quotation caused disputes as for alternative energy investment suitability.

During last decade most countries from all over the world adopted a plant of gradual conversion of economy to alternative energy. As a result the government programs in political and financial support of renewable energy sources enlarged in three times. For example according to the Euro Union energy development strategy the share of alternative energy sources is to be 20 per cent of the total energy consumption volume by 2020.

Analytics consider the annual economy growth generated by renewable energy sources will amount to 5,7 per cent. At such rate this energy world volume will be 3203 GW by 2025.

Unfortunately, foreseen economical crisis could influence both the industry growing rate and structure coefficient which now stands as follows: 33,4 per cent from total amount will be solar energy and 32, 7 per cent will be wind energy. The share of other renewable energy sources will amount to 8,6 per cent. However, these rates may change after the alternative energy market will be shifted to such regions as Africa, Asia, Latin America and the Middle East. These countries are in conditions of transition economy. This transition became possible after constant reduction of alternative power and economies of scale effect. Therefore we can expect the world alternative energy increment will be performed by the countries of Oceania and Southeast Asia instead of Euro Union.

Another important factor that influences both the alternative energy production costs and industry prospective development is the oil world quotations. Its sharp fall has already led to closing a number of promising projects and reviewing plans of the existing ones. For instance, in US gas prices fell to a five-year-minimum level and were set at 79 cents per liter.  It gave American citizens an opportunity to spend the spare funds for other goods which stimulated a short-term growth of economy.

A number of analytics consider these decisions to be hurried and wrong and positive effect will be mitigated by the fact that reducing prices are harmful for the manufacturers themselves. This opinion was proved by a number of bankruptcies of small oil companies and refining companies’ staff strikes. Nine enterprises have already joined these strikes and 63 more are planning to do that. Striking plants cover 10 per cent of US oil refining. An oversupply of produced crude oil is expected that would make to reduce the production volume.

The world market has already reacted for these events in appropriate way. At the beginning of February Brent oil increased in price by 6,2 per cent and WTI by 6,37 per cent. As a result traditional energy sources went from point of convergence that gave the alternative energy market a chance to save its positions.

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Views: 1247 Added: 19-03-2015