The crude oil is back above 50, up over 3% today. A great bounce for oil stocks as well, and it can go back up to about $70 – $75 a barrel, but this can be temporarily. The demand and supply look like the same as it was in 1986, boss Bob Dudley (BP) said to Bloomberg today.
Technically it seems like the oil price has peaked and that a hundred years old oil rally is over, but it all depends on what happens in the world. After the oil slumped in 1986, it came back again during the Iraqi war in 1990, but I don`t hope a new war will turn the price up again this time.
Yesterday I talked about Apple which is the best luxury brand in China right now. Apple is also the biggest company in the world. This is simply because they are selling Internet of things (IoT). It will be the biggest sector ever. It will become about 40 times bigger than internet. But what about the energy sector?
Oil have been the black gold for decades and ExxonMobil (XOM) have been the worlds biggest company before Apple took that place. The biggest oil companies like ExxonMobil, PetroBras (PBR) and total (TOT) are still big, but at some point they will end up writing off tens of billions of dollars worth of standard assets in their oil fields.
The plunge in the price of oil is more than Opec`s attempt to bankrupt U.S oil shale drillers and to destabilize the petro-economies of rivals Iran and Russia. It`s gonna take some time to fill up the world with battery driven cars, but we will also see a new era for solar and wind energy.
This world need to prevent catastrophic climate change, and that`s why we need to act now. Climate change today is fundamentally a development issue, not a pollution problem.
The new shift will probably take place in a few years from now and alternative energy will go through a «phase change» from fringe to mainstream. It`s still early in the stage, and that`s why you don`t hear about it in the media anymore.
It will be a sharp shift and standard assets of coal, oil and natural gas will turn the global economy up side down. First Solar (FSLR) can be one of the biggest in the solar sector and many others are ready. Look at Denmark. They gets 40% of their electricity from wind, while Texas gets 30%.
This is just piece of cake compared to what we will see in the future, when 5 cent/kilowatt-hour solar becomes standard pricing around the world. I wrote about Solar City in January 2014. They are a little bit bigger than First Solar, and I belive in that company in the long run. Up +11% on monday.
What goes up, must come down. Right now it seems like the oil price is moving up again, but once the market starts to discount the end of the fossil fuel era, the crash is just around the corner, and big oil companies like ExxonMobil will lose more than half their current value.
It is when the solar prices is cheaper than fossil fuels it will overwhelm the markets, and that will be a revolution in the making. A technological phase change from oil to solar. From oil to solar and wind power, and that`s gonna overwhelm the energy markets.
The energy movement will be massive. It is when prices goes down to about 4 – 5 cents/kwh the new shift will come, but it may take some time.
Solar-Wind is an owner of 184,6MW of solar and wind projects assets, and they has set a $19 – $21 price range for its 8,7 million shares IPO. Ticker is set to be SLWD. This is a valuation of $200 million. The YieldCo planed cash distributions of $26 million ($1,30/share) in 2015.
TerraForm`s (TERP) successful IPO could bode well for Sol-Wind. The SunEdison YieldCo remains up 30% from its $25 IPO price in spite of the huge selloff seen in solar stocks in recent months.
If you`re not familiar with stock picking, I suggest you look at Guggenheim Solar ETF (TAN). As you can see from the chart above, there has been a big selloff in the solar sector, but this sector will come back again, but it is very early right now. TAN is up +4,79% so far today.
The Prime Minister in India, Narendra Modi reiterated plans for the country to install as much as 100 gigawatts of photovoltaic capacity by 2022. President Obama stated that the U.S will stand ready to speed this advancement with additional financing. China has 33,4 gigawatts installed. They are undergoing a photovoltaic expansion that targets 100 gigawatt capacity by 2020.
Personally, I love clean and renewable energy!
Green energy is the future.
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