Will Rising Oil Prices Finally Help Green Businesses?
All indications are that in the second half of 2009 oil prices continued to rise and many experts believe that triple-digit prices per barrel will once again be the norm. Oil futures on the New York Mercantile Exchange are up more than 50% since early 2009. Experts on higher gasoline prices should predict that the American public will once again jump on the green energy bandwagon.
Surprisingly, financial gurus speculate that rising oil prices may not be the boon for green businesses that many people expected.
First, prices are likely to continue rising as China’s economy becomes even more oil-hungry, fueled by massive government stimulus measures. That means oil supplies are unlikely to be able to keep up with the crushing demand as China ramps up its manufacturing activity to an all-time high. Combine that with the fact that US oil inventories have been falling steadily and it has been a long and difficult 2009 for US consumers.
Why isn’t it all GOOD news for green energy companies?
A big part of the problem is stinginess on the part of lenders and venture capitalists as they nervously wait to see how the predicted oil crisis will play out. That means the green tech companies that need the most capital will also have to wait. There may be money available for the strongest green tech firms, but economic uncertainties will likely make it a tough time for smaller companies, and especially startups, meaning some of the brightest ideas won’t be around to help. America to weather the newer oil. storm.
To the credit of the United States, demand for oil stabilized in 2009, but analysts predict that higher oil prices could slow down the fragile recovery process of the US economy. That will trigger a ripple effect that may further hurt America’s recovery as investors turn away from green energy startups… and startups of all kinds as the country’s future prospects turn dimmer.
However, the future of green technology still looks bright in the long run. As oil and gas prices continue to rise, the world’s mindset will inevitably change, eventually making green power the first choice in a wide variety of applications rather than the poor stepchild it has been considered for decades. Over time, expensive oil will lead to its demise as a fuel source.
The problem for green companies is not the future… it’s staying in business while they wait for the world to catch up.