The Solar Industry's Attack On The Oil Industry
It is widely understood that the solar industry
is a completely different energy sector than the oil industry. In no way are they connected at all and simple logic would suggest that any price changes in one of the industries really should have no affect on the other. However, this has proven to be false and they do indirectly affect one another where the economy is concerned.
While solar does not directly compete with the oil industry for being the top source of electricity in most areas, it does compete on some smaller islands and some countries that export crude oil. The oil industry only generates under one percent of the United State's electric power supply and only five percent around the whole world. Even with those small percentages, the changes in oil prices still have had a great impact on the overall attractiveness of using solar energy to top investors.
With the numbers stated, it seems that the only reason that the oil industry is affected by the solar industry is a mental one where the investors are involved. Some analysts have deemed this as a sign of investors oversimplifying the situation and lumping together all renewable energy sources. They are expecting them all to rise as older energy sources decline on their own accord. The connections between the solar and oil industry are seemingly connected. Whenever there is a price increase in oil, the stocks for solar go up with it. The same is true the other way around. If the solar industry sees a rise in production, the oil prices go up with it as well.
Unfortunately, it seems the correlation between the two going through changes at the same time seem to be related to emotions more than because of supply and demand. The demand for solar is not related to oil for supply and demand and the numbers do reveal just how little of an intersection both the solar and oil industries actually have.
With regards to the prosperity of the future, the demand for electricity will continue to rise. Therefore, there will continue to be an increase in the correlation between the consumption of electricity and economic growth. It is very important, however, to realize how this electricity will continue to be produced. Historically speaking, coal has been the biggest source of generating electricity. However, there are big changes coming into play and the era of continuous demand for fossil fuels will be coming to an end.
A substantial growth in renewable energy
is expected to continue and is associated with the improvements in technology and its falling costs. The cost of solar and wind power are beginning to get cheaper and cheaper. Even the cheapest coal available on the market will not be able to compete with the momentum of the solar and wind energy growth. Wind and solar power farms could be where much of our energy would come from. The farms would be located all around the country in remote and rural areas to generate enough electricity for the surrounding areas.
In the light of recent changes to the solar industry and the current changes to the whole global energy landscape, the gas and oil companies need to accurately assess the reality of the situation and work to change their strategies accordingly. If they don't, they will run the risk of complete disintegration.