Cheap oil bad for renewable energy

The cash price for regular unleaded gas for $2.79 is displayed at a BP station in Royal Oak, Mich.


Bill Radke: Oil dependent countries are quaking as the price of a barrel of crude drops and drops. This morning, OPEC oil ministers meeting in Vienna agreed on a big production cut -- 1.5 million barrels a day starting next month. But oil is still trading below $63 a barrel this morning compared to $147 this summer. That might sound great as you watch the price of gas fall below three bucks, but as Sarah Gardner reports from the Marketplace Sustainability Desk, as oil goes, so goes renewable energy.

Sarah Gardner: The global credit crunch has already stalled some renewable energy projects. And the falling price of oil and gas undercuts the incentive to start these projects in the first place.

Kevin Book at FBR Capital Markets says take natural gas prices. They have to get pretty high for say, wind power, to look affordable.

Kevin Book: You have to get up into the $9 to $10 range, just to make a wind project with the federal subsidy work.

This week, natural gas prices ran below $7 per thousand cubic feet. Falling energy prices can also dull the public's sense of urgency about cutting their own energy consumption.

But Ethan Zindler at New Energy Finance foresees a new frugality:

Ethan Zindler: I'm dubious that a drop in the gasoline price, even by a dollar, is going to convince Americans to truly return to carefree spending ways.

Long-term, analysts predict, oil prices will head back higher anyway, making renewables more attractive again.

I'm Sarah Gardner for Marketplace.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk covering sustainability news spots and features.
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The next US President (whomever it is) should keep Energy independence AND sustainability as a primary priority. Investments in alternatives to fossil fuels will keep us from flushing enemies of democracy (like Iran and Venezuela) with cash to fund anti-US sentiment around the world. A coherent long-term energy policy is likely to have a much better Return on Investment (ROI) than any war. In this ROI case, the investment is resources, goodwill, and lives, and the return is democracy and world peace (completely contrary to the Iraq war which has brought misery and world economic despair). An investment in a good energy policy is likely to succeed.

I take very seriously the propositions of both US candidates, and expect whomever wins to follow his energy independence promises.

There weren't that many economic incentives to send a man to the moon, and yet the US executed it beautifully. Why can energy independence be a project like going to the moon? We know that if we don't become independent, we will be in this same predicament some years from now. I would gladly pay more Gas taxes if they provided an incentive for alternative energy AND the money would come back to me in the form of economic stability for the long term (different from short term things such as bank bailouts and $600 checks).

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