Exploit the Irony of Renewables

Renewable energy

Written by Brian Hicks
Posted November 2, 2005

On page 24 of this month's Wired Magazine is an ad that reads, "The world consumes two barrels of oil for every barrel discovered. So is this something you should be worried about?"

Below the headline is an image of a bulletin board with a picture of cheerful black children surrounded by push-pinned notes spewing what looks like something I'd write about the global need for alternative energy…hitting all the hot buttons, like dwindling oil supplies, fuel efficiency, hybrid technology, conservation, solar alternatives, etc.

And in the far left corner, the organization that paid for this full-page ad lets you know that it has committed over $100 million every year to renewable energies, alternative fuels and improving efficiency.

But then it goes on to tell you that they have also achieved (in 2004), an exploration record 78% higher than the10-year industry average and used steamflooding to extract heavy oil that was previously unrecoverable - more than 1.3 billion barrels from one field alone.

Is this an ad for renewable energies or not???

And there it is - in bright ocean blue and cardinal red, floating boldly above the words, 'human energy'…the Chevron emblem.

Chevron, just like a number of other oil companies I'll get to in a moment, has been spending millions to let you know that it's concerned about the environment and your energy needs.

Now I'm not trying to use this article as a soap box to call bullsh#* on the oil companies - but you'd have to be complete moron to believe for one second that any oil company would spend one dime on alternative energies (or PR for alternative energies) if it wasn't profitable.

They know that the days of easy oil are over.

And I'd be willing to bet a lot of money that these alternative energy plans were drawn up years before I was even born…and have been sitting safely under lock and key for just this occasion.

But from a purely economic perspective, you can't blame them.

With all that revenue coming in, why would they even consider pushing renewable energy (a potential competitor) if it wasn't a necessity?

The environment?

You believe that one and I have three bridges I'd like to sell for you a low, low price!

For years the oil companies did an excellent job at keeping the lid on renewable energy growth. Through meticulously planned misinformation campaigns, they single-handedly convinced the American public that renewable energy technology was inefficient, expensive and unrealistic.

In fact, a few years ago while in Disney World, I found myself face to face with an exhibit about alternative energy technology on a ride called Spaceship Earth.

There it was…solar energy with all its advantages and solutions - followed by a subtle message that renewable energy technologies were, unfortunately, not advanced enough to provide us with clean, efficient and cheap energy at this particular time.

I guess in the meantime, we should continue to use Exxon's reliable fossil fuels.

Why Exxon - because they sponsored the ride!!!

But again - what else would you expect?

Oil companies have a responsibility to their shareholders. Not Greenpeace!

Listen, I've always been an advocate of clean, renewable energy. But the oil companies run the energy show. Period.

And no matter how good your intentions are - capitalism is the final catalyst for change.

Nobody does it better

When it comes to peddling cheap energy - the oil companies know how to do it better than anyone. So who better to push renewable energies forward?

To put it bluntly, oil giants have the experience, the track record and capital to profit from the renewable energies markets.

Just throw in a top notch PR campaign, and a company like Chevron goes from being a profitable fossil-fuel supplier with little regard for global warming to a profitable ENERGY supplier that's looking out for the earth's best interest.

Of course, for the most part, the goal is not an environmental one.

It's bottom line!

And you can bet that renewable energies are securing this bottom line for the oil giants.

Why else do you think BP operates one of the most profitable solar companies in the world - under the appropriate moniker, BP Solar?

Interestingly enough, it was only a few years ago when we first started to see BP's new 'coat of arms' - a green and yellow floral sunburst design that cost the company a $7 million consultation and design fee.

And go to BP's website. You'll be greeted with a green and yellow design that doesn't seem to fit with the traditional image of an oil company.

Of course, the ironic side of all of this is that so many people who have been pushing the "Green" agenda for so long are now questioning the oil companies' motives. Wanting to know why "all of the sudden" they're so interested in renewable energy.

I think we all know that answer to that one.

But who cares?!!

From the environmental side of it - does it really matter who develops it?

And from an economic perspective - what's wrong with profiting from renewable energy technology? How else do you think it's going to move forward and become a viable solution to our unstable energy infrastructure?

The solar fairy???

Furthermore, the embracing of renewable energy technology by the oil companies will only offer increased opportunities for investors.

Whether from smaller competing firms - which at this stage of the game are proving to be just as profitable for renewable energy investors (just look at Evergreen Solar (ESLR:Nasdaq) for instance), or from manufacturing and R&D firms that stand to make a killing from an avalanche of new contracts and partnerships backed by the traditional oil giants.

Changing of the guard

Oil companies aren't the only new cooks in the renewables kitchen either.

Historically, renewable energy initiatives have been the domain of liberals, democrats and activists…often brushed aside as nonsense by staunch conservatives, republicans and bottom-line-focused capitalists.

But that doesn't seem to be the case anymore.

In fact, if it weren't for a Tennessee republican by the name of Lamar Alexander, the 2005 energy bill might not have ever included those all-important solar tax credits.

And states that have traditionally been conservative or republican are also joining the party as well.

Look at Arizona for instance.

Last year, a poll conducted in this southwest state revealed that 80% of its residents were so gung-ho on renewables, they were willing to shell out an extra $2.00 per month to support new renewable energy requirements.

Moreover, the poll also indicated that more republicans would actually support an increase in renewable energy requirements than democrats!

Incidentally, for three days running this summer, Arizona had record peak usage - almost maxing out capacity.

Is it any wonder so many Arizona residents are supporting solar initiatives?

Of course the true validation of a changing of the guard is the crossover, albeit subtle, of the oil giants.

Now that renewable energy technology has become more of a necessity than a privilege for the wealthy and eccentric, the gap between renewable energy activist and no-nonsense capitalist is closing fast.

The people have spoken

In the past five years, the number of residential customers buying renewable energies has more than doubled.

According to a report from the U.S. Department of Energy, voluntary demand for renewable energy (as opposed to regulatory requirements) now tops 2,200 megawatts.

That's more than a 1,000 percent increase since 2000!

And that number is expected to increase even further, well into the next decade.

You see, profits from the renewable energies markets can only be fully realized if the industry is embraced by the business community, the political community and society as a whole.

Today, all these pieces of the puzzle are in place…

Wall Street is making a killing on renewables
Politicians are passing legislation in support of renewables
Residential and industrial demand for renewables is at an all-time high
Now let's add some more clean fuel to this fire:
Oil prices have skyrocketed
There's less than 30 years of easy oil left
The world is consuming more energy than it's producing
Heating prices are predicted to double this winter
Natural gas prices have increased by about 100% since January
Oil dependence threatens our national security
I'm telling you, the marketplace for renewable energies is not only real, but is on solid ground.

Sure, we're still seeing the development of new technologies in solar, geothermal , hybrid, wind, etc.

But the foundation - the tangible, economic foundation is firmly in place. It will not be budged. No matter how hard the shrinking numbers of naysayers try.

By the way, you can be sure that this is something savvy investors will have no problem remembering come winter when heating bills go through the roof - and renewable energy stock prices hit new highs.

This will be the most profitable winter for renewable energy investors - ever!

And you can be sure that the oil companies pushing renewables will be grabbing a significant piece of this action too.

Will you?

If you want to make money in the energy sector - diversify with renewables!

And do it before the first of that arctic air blankets the northeast later this month.

Until next time...

Jeff Siegel
Editor, Green Chip Stocks

P.S. - Every single one of my renewable energy stock picks is up! And it's only going to continue as we head into winter…when heating bills double and residential and industrial solar installation contracts pile up faster than ever before. There's no reason you shouldn't be profiting from this. Become a Green Chip Stocks member today.

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