The next bubble made of renewable energy
First it was technology, then real estate, oil, and the rest of the commodities, including food, but what comes next in this wild market of endless bubbles. Where is the next big sector?
No sector looks as good as alternate energy, whether bio-fuels, solar panels, or high mileage cars. The boom in oil prices and a shrinking supply are pushing people towards energy friendly products, specifically energy products. High mileage cars are becoming best sellers, striking out the years of larger cars and no respect for high gas prices. But now that consumers are paying $3.60 at the pump stateside, there is a growing shift away from fossil fuels toward alternative energy.
This article will make a case for an investment in alternate energy and the future of the sector. While it seems that its run may be over, as long as oil prices rise, so should the stock values of alternative energy companies.
1. Government incentives
Government incentives geared toward green energy are abundant. The future growth of alternative energy, if not from the private sector, can still be guaranteed with the billions of dollars that flow to energy companies in an effort to produce energy efficient cars and fuels. All of these subsidies have to find a home, most of which find it in the pocketbooks of the new bio-tech companies.
2. Traditional energy is expensive
The best thing that alternative energy has is economic worth. While alternative energy was considered ridiculous when gas prices were $1 a gallon, at $3.50+, it appears as though the public has had a change of heart. For alternative energy to ever become an important sector, it must first be economically feasible. Now that traditional energy prices are soaring, the alternate energy sector will receive more demand.
3. Mass production cuts costs
Mass production of solar panels and alternative energy products is lowering the cost of production. One reason that solar panels and other green energy sources have yet to make it into the homes of consumers is because of the high production costs. Costs to produce solar panels has dropped considerably, while efficiency has increased. By 2010, the solar energy sector alone is going to be a $25 Billion a year industry. There is still much room for growth in these markets; truly, the sunny sky is the limit.
4. Growth in efficiency
Much like hardware and software components, new technology forces early adopters to upgrade. Over time, the people who bought the first solar energy or bio-energy components will likely upgrade as efficiency gets better and better. We’re still in the early stages of alt-energy, thus the ability for corporations to sell to the same consumer many times is present.
5. Ethics funds love alternative energy
There are many socially responsible funds geared to avoid sin stocks, such as cigarettes or alcohol companies, while investing in green energy and new technology. As the ethics investing scene grows, so will further investment in green energy, an industry many see as the solution to the future. Global warming warnings abound, and thus, there are many people who will make it a point to invest in clean tech. Get in before the rush.
There are plenty of reasons to invest in clean energy, but you really only need one reason: alternative energy stocks are set to explode. We’ve yet to see what $4 gas does to the green energy sector; perhaps it will only push stock prices higher and higher.