Solar Thrives on Low Oil Prices

I huffed and I puffed, but no one paid attention.

I suppose you need the swagger of an Elon Musk, Alan Greenspan or Kim Kardashian to move the needle. I think I'm going to need about 26 million more Twitter followers before I'm relevant enough to join the likes of these heroes and villains.

In any event, my temper tantrum last week was directed at the illusion that falling oil prices are bad for solar stocks. I suppose my first mistake was to hold my breath over an illusion. This is something a number of armchair analysts and media blowhards opined about on Friday when oil prices slipped again. It's also a line of thinking that's severely flawed.

Oil is used primarily as a transportation fuel while solar is used to generate electricity. It's pretty simple, really. In fact, if we're really looking for a connection here we can only find one – and it actually benefits the solar industry.

Benefits, Not Handicaps

One distinct advantage of lower oil prices for solar manufacturers is that it's now cheaper to ship their products. Panels, racking mounts, inverters – basically anything that needs to be driven, flown or sent across an ocean or down a river can be done so at a significant discount compared to where we were just a few months ago. CEOs love to look at their margins after feeling the warm embrace of a 30% cut in fuel costs!

This holds true for solar installers, too. Whether its the sales people driving around their territories or installers driving to their next job – cheaper fuel costs are benefits, not handicaps.

Of course, all this being said, the market responds only to the actions of human investors and fancy algorithms. It spits out what we put in. And as long as folks believe that falling oil prices are bad for the solar industry, solar stocks will struggle. Fortunately, most solar stocks aren't tanking today like they were yesterday. Take a look ...

• Trina Solar (NYSE: TSL)– Up 5%
• Canadian Solar (NASDAQ: CSIQ) – Up 4.5%
• JA Solar (NASDAQ: JASO) – Up 5.29%
• Yingli (NYSE: YGE) – Up 3.57%
• First Solar (NASDAQ: FSLR) – Up 2.19%
• SunPower (NADAQ: SPWR) – Up 0.08%
• Sky Solar (NASDAQ: SKYS) – Down 0.65%
• Vivint Solar (NYSE: VSLR) – Down 2.79%
• SolarCity (NASDAQ; SCTY) – Up 0.49%