Low oil prices and the credit crunch are threatening to stall the green revolution. The value of crude has dropped from a summer high of nearly $150 a barrel to below $40, taking the wind out of the sails of turbine manufacturers and others trying to build low-carbon alternatives.
Jeremy Leggett, founder and executive chairman of Solarcentury, says: “Talk of the death of renewables is premature but clearly big solar farms and wind projects are being cancelled. Everything is suffering in the current climate but its my contention that the low oil price is a temporary thing and the growth of renewables will resume.”
Michael Liebreich, chief executive of information provider New Energy Finance, says his leading index of clean-technology companies has fallen from a high of 450 points 12 months ago to 175 points, hit by a triple whammy of lower oil prices, higher costs of capital and fear of more speculative start-up businesses.
But he too is confident that the sector can bounce back. “There was no doubt that there was a certain amount of irrational exuberance over the low-carbon economy. No industry in history has kept up the kind of 40% compound growth rates being ascribed to clean tech so share prices had run up too far and it was time for a correction.”
Clean-tech and renewables stocks have been struggling with more than just sentiment. Indian-based wind turbine manufacturer Suzlon Energy, which has seen its share price plunge by 90% this year, has also been hit by malfunctions and the kind of teething problems it says is are inevitable with new types of technology.
Wind developers in the US have been cutting back in the face of tough new conditions. FPL Group, the US’s largest wind-power operator, is cutting its spending this year by nearly a quarter to $5.3bn (£3.7bn) and new wind-power generation from 1,500 to 1,100 megawatts.
Confidence in the sector has also been rattled by T Boone Pickens, a veteran oil man who delighted environmentalists with a very public conversion when he promised to build the world’s largest wind farm in Texas. He slammed on the brakes in November on the basis that lower oil prices had changed the economics of a scheme that would have powered 1.3m homes.
However the US wind sector has generally been faring better than the British one, thanks to tax breaks. Shell and BP have made it clear they are no longer interested in pursuing UK farms when the investment numbers stack up much better across the Atlantic.
The decision by Shell to pull out of the London Array wind farm was a particular blow to British confidence. The project has been billed as the biggest offshore scheme of its kind in the world but the oil company said the margins were too thin, leaving E.ON of Germany and Dong Energy of Denmark to go it alone.
Anton Milner, the chief executive of Q-Cells, the world’s largest manufacturer of solar cells, cut earnings forecasts recently after being hit by what he described as a “flood” of cancellations from developers of solar-power projects struggling to raise finance. The US manufacturer Evergreen Solar has since delayed an $800m new factory in Asia that would have manufactured enough solar cells to power a city of 500,000 people.
But most industry figures are convinced that though the threat of global recession is slowing down the industry, the future remains bright enough, especially with a new figure taking over the White House. Liebreich says his clean-tech index has seen an “Obama bounce”, rising from a low of 130 to 175 on the back of optimism about the incoming president’s policies.
A raft of radical political appointments – such as Nobel physics laureate Steven Chu as energy secretary – has convinced environmentalists that Barack Obama is serious about his stated aim of hastening progress towards a low-carbon economy with a green New Deal that will reduce his country’s dependence on imported oil.
A quarterly review of climate change-related business opportunities just published by analysts at HSBC says governments are increasingly active. “The engagement of governments has grown globally,” they say. “Across the political spectrum there is now more recognition that climate change is a genuine long-term global issue with real growth potential.”
Martin Wright, managing director of Marine Current Turbines, says no one should expect oil and gas prices to stay low. “Vladimir Putin has already said the era of cheap gas is over and no one knows when peak oil really will come about. So we can expect enormous price volatility, which all points to the need for Britain to develop an independent low-carbon alternative.”
Source - The Guardian
Showing posts with label oil prices. Show all posts
Showing posts with label oil prices. Show all posts
Thursday, 8 January 2009
Monday, 9 June 2008
UK gas could soon rise 40% and electricity by 20%
Fresh warnings have emerged that oil prices could go even higher than Friday’s record close and domestic gas prices in Britain may surge by 40% on the back of the trend.
Oil saw its biggest-ever one-day price jump on Friday with a leap of more than $11 a barrel to yet another all-time high of $139.12, meaning that the cost of the fuel has risen sevenfold since 2002 and doubled in the past 12 months, raising fears of both inflation and recession in oil-consuming nations.
Website theEnergyShop.com warned over the weekend that gas prices to retail customers could soon rise 40% and electricity by 20%. On Friday, forward wholesale gas prices rose 5.3%, meaning they are up 76% in the past year.
Joe Malinowski, founder of theEnergyShop.com, said wholesale prices for gas have risen above retail prices.
“The last time wholesale gas prices broke above retail gas prices was two years ago, in June 2005. In the following 18 months energy bills rose by a record 47%. A very similar thing is going to happen this time around, except that the money value of the increase is going to be even higher,” he said.
Prices look set to open higher this morning after Mohammad Ali Khatibi, Iran’s representative at the oil producers’ cartel Opec, forecast yesterday that prices would hit the $150 a barrel mark by the end of summer.
Similarly bullish comments came from Shokri Ghanem, head of Libya’s National Oil Corporation, who said there were no moves within Opec, which pumps a third of the world’s oil, to increase supplies further. “I think it [the oil price] will go higher. That is a trend that will continue for some time. The easy, cheap oil is over, peak oil is looming,” Ghanem said, referring to the theory that world oil supplies may be about to peak and start declining.
Ghanem added, however, that oil prices were rising at the moment for other reasons, such as speculation and concern over political tension in the Middle East.
Energy ministers of the Group of Eight rich nations failed over the weekend to back Gordon Brown’s demand to urge Opec to increase supplies of crude oil.
Instead the ministers, meeting in Japan with non-G8 countries China, India and South Korea, which jointly with the G8 consume two-thirds of the world’s oil, talked of the need to promote energy efficiency.
“We will continue to vigorously promote policies and measures for improving energy efficiency,” they said.
Surging oil and food prices over the past couple of years have pushed up inflation in many countries at a time when economies are slowing, preventing central banks such as the Bank of England and European Central Bank from cutting interest rates to head off recession.
Governments around the world are struggling with street protests and even riots against rising food and petrol prices. In Britain, pump prices are already at record highs, leading to pressure on the chancellor, Alistair Darling, to scrap a planned 2p a litre fuel duty rise scheduled for October - even though that would make little difference to prices. Diesel is already more than £1.30 a litre in many parts of the country.
Airlines are warning that they cannot make money with fuel prices at these levels and many expect to plunge into losses. Ryanair boss Michael O’Leary has predicted that several European airlines will go out of business and US carriers have signalled they are to start charging for baggage.
The aerospace group Boeing warned yesterday that orders for its new planes were “on a knife edge”.
However, the US energy secretary, Sam Bodman, acknowledged at the weekend that the Bush government was powerless: “There are relatively few things we can do short term.”
The German economy minister, Michael Glos, said yesterday he was worried at the rapid rise in oil prices and wanted greater international cooperation on the issue.
Source - TheGuardian
Oil saw its biggest-ever one-day price jump on Friday with a leap of more than $11 a barrel to yet another all-time high of $139.12, meaning that the cost of the fuel has risen sevenfold since 2002 and doubled in the past 12 months, raising fears of both inflation and recession in oil-consuming nations.
Website theEnergyShop.com warned over the weekend that gas prices to retail customers could soon rise 40% and electricity by 20%. On Friday, forward wholesale gas prices rose 5.3%, meaning they are up 76% in the past year.
Joe Malinowski, founder of theEnergyShop.com, said wholesale prices for gas have risen above retail prices.
“The last time wholesale gas prices broke above retail gas prices was two years ago, in June 2005. In the following 18 months energy bills rose by a record 47%. A very similar thing is going to happen this time around, except that the money value of the increase is going to be even higher,” he said.
Prices look set to open higher this morning after Mohammad Ali Khatibi, Iran’s representative at the oil producers’ cartel Opec, forecast yesterday that prices would hit the $150 a barrel mark by the end of summer.
Similarly bullish comments came from Shokri Ghanem, head of Libya’s National Oil Corporation, who said there were no moves within Opec, which pumps a third of the world’s oil, to increase supplies further. “I think it [the oil price] will go higher. That is a trend that will continue for some time. The easy, cheap oil is over, peak oil is looming,” Ghanem said, referring to the theory that world oil supplies may be about to peak and start declining.
Ghanem added, however, that oil prices were rising at the moment for other reasons, such as speculation and concern over political tension in the Middle East.
Energy ministers of the Group of Eight rich nations failed over the weekend to back Gordon Brown’s demand to urge Opec to increase supplies of crude oil.
Instead the ministers, meeting in Japan with non-G8 countries China, India and South Korea, which jointly with the G8 consume two-thirds of the world’s oil, talked of the need to promote energy efficiency.
“We will continue to vigorously promote policies and measures for improving energy efficiency,” they said.
Surging oil and food prices over the past couple of years have pushed up inflation in many countries at a time when economies are slowing, preventing central banks such as the Bank of England and European Central Bank from cutting interest rates to head off recession.
Governments around the world are struggling with street protests and even riots against rising food and petrol prices. In Britain, pump prices are already at record highs, leading to pressure on the chancellor, Alistair Darling, to scrap a planned 2p a litre fuel duty rise scheduled for October - even though that would make little difference to prices. Diesel is already more than £1.30 a litre in many parts of the country.
Airlines are warning that they cannot make money with fuel prices at these levels and many expect to plunge into losses. Ryanair boss Michael O’Leary has predicted that several European airlines will go out of business and US carriers have signalled they are to start charging for baggage.
The aerospace group Boeing warned yesterday that orders for its new planes were “on a knife edge”.
However, the US energy secretary, Sam Bodman, acknowledged at the weekend that the Bush government was powerless: “There are relatively few things we can do short term.”
The German economy minister, Michael Glos, said yesterday he was worried at the rapid rise in oil prices and wanted greater international cooperation on the issue.
Source - TheGuardian
Saturday, 31 May 2008
Enquiries for solar panels are rising fast
Theories were emerging yesterday over the environmental effects of oil at $130 a barrel or more. In the green corner were the optimists, who believe that the shock will force people to cut their energy use, invest in renewables and energy conservation, downsize their cars, take fewer foreign holidays and reduce greenhouse gas emissions.
Others fear that oil prices at this level for any length of time will usher in a new bleak period where governments turn to extracting coal, growing biofuels and deforestation.
There was evidence of both trends yesterday. As Honda announced it was increasing output of its hybrid cars because of high fuel prices, Stuart Lovett of Heat my Home.co.uk said inquiries about his company’s solar panels to heat water and generate electricity through solar panels, had risen by more than 50% in five months.
“The oil price rises change the payback period dramatically. Anyone who buys solar equipment now has probably paid off the investment at the moment he buys it. High oil prices like this are good for us but no one else.”
“These prices are already proving to be the biggest single factor in curtailing the expansion of the aviation industry, and that wont necessarily be a bad thing,” said Ben Stewart, communications director at Greenpeace. “One hopes it will lead to a huge investment in alternative sources of energy. We are moving into the unknown. As prices increase, it will just have to lead to the investment that we so desperately need.”
Tom Burke, environmental scientist and visiting professor at Imperial College London, said that in the short term the oil price rise would cause a rush to exploit oil tar sands in Canada and Venezuela, and possibly deforestation in the Amazon to clear space for biofuels.
“We have passed the peak of cheap oil. I do not think it will slow down Indian and Chinese vehicle use. It will really hit the aviation industry and could cut the ground under the push for the third runway at Heathrow. It could also strengthen the localisation movement.” The majority of companies, he said, had already done a lot already to reduce their energy use.
Environmental consultant and former -director of Friends of the Earth Charles Secrett said the lesson of history in high oil prices was that it was an opportunity for change. “In the years after the 1973 oil shock, energy efficiency soared, but governments did not step in with policies to encourage alternatives energies to flourish. They have the real choice now.”
In the short term, the oil price rise is expected to cause further increases in the price of fertilisers, which doubled last year as US farmers rushed to put as much on fields as possible to take advantage of high prices for biofuel crops. But in poor countries the more expensive fertilisers are likely to be beyond the means of most small farmers. This could reduce farm yields and incomes, and result in more deforestation as people turn to any source of income they can.
“This is a wake-up call. In the short term we can already see people in the US cutting down on their driving, starting to use public transport and not buying SUVs. But in the long term it means that we have to completely rethink how we use energy”, said Walt Patterson, a fellow in the sustainable development programme at Chatham House in London.
Source - The Guardian
Others fear that oil prices at this level for any length of time will usher in a new bleak period where governments turn to extracting coal, growing biofuels and deforestation.
There was evidence of both trends yesterday. As Honda announced it was increasing output of its hybrid cars because of high fuel prices, Stuart Lovett of Heat my Home.co.uk said inquiries about his company’s solar panels to heat water and generate electricity through solar panels, had risen by more than 50% in five months.
“The oil price rises change the payback period dramatically. Anyone who buys solar equipment now has probably paid off the investment at the moment he buys it. High oil prices like this are good for us but no one else.”
“These prices are already proving to be the biggest single factor in curtailing the expansion of the aviation industry, and that wont necessarily be a bad thing,” said Ben Stewart, communications director at Greenpeace. “One hopes it will lead to a huge investment in alternative sources of energy. We are moving into the unknown. As prices increase, it will just have to lead to the investment that we so desperately need.”
Tom Burke, environmental scientist and visiting professor at Imperial College London, said that in the short term the oil price rise would cause a rush to exploit oil tar sands in Canada and Venezuela, and possibly deforestation in the Amazon to clear space for biofuels.
“We have passed the peak of cheap oil. I do not think it will slow down Indian and Chinese vehicle use. It will really hit the aviation industry and could cut the ground under the push for the third runway at Heathrow. It could also strengthen the localisation movement.” The majority of companies, he said, had already done a lot already to reduce their energy use.
Environmental consultant and former -director of Friends of the Earth Charles Secrett said the lesson of history in high oil prices was that it was an opportunity for change. “In the years after the 1973 oil shock, energy efficiency soared, but governments did not step in with policies to encourage alternatives energies to flourish. They have the real choice now.”
In the short term, the oil price rise is expected to cause further increases in the price of fertilisers, which doubled last year as US farmers rushed to put as much on fields as possible to take advantage of high prices for biofuel crops. But in poor countries the more expensive fertilisers are likely to be beyond the means of most small farmers. This could reduce farm yields and incomes, and result in more deforestation as people turn to any source of income they can.
“This is a wake-up call. In the short term we can already see people in the US cutting down on their driving, starting to use public transport and not buying SUVs. But in the long term it means that we have to completely rethink how we use energy”, said Walt Patterson, a fellow in the sustainable development programme at Chatham House in London.
Source - The Guardian
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