Strange things are happening in the world’s energy markets. To almost everyone’s surprise, a massive campaign by the Saudis to undermine the growth of alternative energy producers is proving to be a near-complete failure.
Thanks to government incentives, concern over climate change, and some impressive technological advances, the growth of alternative energy seems to have finally decoupled from price shifts in the oil market.
Low oil prices are creating some odd economic distortions. With the exception of a brief window during the financial collapse, we have been operating for 15 years under a general expectation of relatively expensive energy. Business models adapted around those expectations, with companies sensitive to high oil prices adopting leaner practices and a majority of our manufacturing activity centered on energy development.
This sudden drop is curtailing investment among oil, gas and coal producers, but energy-reliant businesses continue to be wary of expansion, fearing lower prices won’t last. They are mostly just stashing the premium from cheaper energy rather than investing in growth. Until the impact of cheaper energy on consumer spending starts to build, creating new growth pressures, we may actually see lower oil prices produce a counter-intuitive slowdown in the economy.
From The Big Picture: How the oil price decline is impacting business investment.
From Governing: Impact of declining oil prices on state revenues.
From The New York Times: Low prices are finally starting to impact the bottom line at major producers.
From the Solar Foundation (.pdf): The number of jobs in the solar industry is increasing at more than 20% a year, now double the employment level in the coal business.
From Green Tech Media: China is determined to own the solar market.
From Science 2.0: The latest in science denial from the left, the fight over nuclear energy as a response to climate change.
From CNN Money: Important statistic to watch, the foreclosure rate in Texas. While foreclosure rates continue to decline nationally, they rose 15% last year in Texas, and more than 300% in North Dakota. Right now those foreclosures in Texas are concentrated in the state’s western oil belt. If the numbers start to rise more significantly in Dallas and Houston expect trouble.