The Great Solar Oil Burden

But OPEC Doesn't Produce Electrons!

Written by Brian Hicks
Posted November 28, 2014

solaropecSitting here on the day after Thanksgiving, I watched solar stocks tumble.

Oil prices fell below the $70 mark, and as a result, solar stocks were down.

Wait, what?!

Although there is little to no correlation between solar stocks and oil prices, many investors are still under the illusion that cheaper fuel means less of a demand for alternative energy.

The truth is, oil is used primarily as a transportation fuel while solar is used for electricity. So unless you're one of the few hundred folks in the world who actually fuels your electric car with solar panels, there's no connection here.

Of course, that doesn't matter to the market.

The market simply provides the output, responding to irrational input.

The truth, however, is that lower oil prices, resulting in lower fuel prices, should actually benefit solar companies by alleviating fuel cost burdens associated with distribution. And certainly all those SolarCity (NASDAQ: SCTY) and Vivint (NASDAQ: VSLR) trucks are saving a few bucks at the pump right now, too.

Still, the market doesn't compute logic. So we sit here today, less than 24 hours after destroying a delicious Thanksgiving dinner, and bite our lips as we review a lot of red:

  • Trina Solar (NYSE: TSL)– Down 7.2%
  • Canadian Solar (NASDAQ: CSIQ) – Down 11.69%
  • JA Solar (NASDAQ: JASO) – Down 7.86%
  • Yingli (NYSE: YGE) – Down 7.72%
  • First Solar (NASDAQ: FSLR) – Down 5.41%
  • SunPower (NADAQ: SPWR) – Down 4.32%
  • Sky Solar (NASDAQ: SKYS) – Down 7.76%
  • Vivint Solar (NYSE: VSLR) – Down 0.98%
  • SolarCity (NASDAQ; SCTY) – Down 2.67%