[Graeme]

How Will Temporary Decline in Oil Prices Impact Energy Sector?

$this->bbcode_second_pass_quote('', 'W')e are currently seeing a sharp correction in the oil market that’s been amplified by financial market restructuring and a global recession, but if my analysis is correct oil prices will revert to their new trend line over the next 12 to 18 months and then resume their relentless upward march until another inflection point is reached. By the time the global economy emerges from the current recession, it looks like $70 to $80 oil is a virtual certainty.

So the real question is how will a temporary decline in oil prices impact the energy storage sector over the next couple of years?

Many observers have suggested that a precipitous decline in the oil markets will have a disastrous impact on alternative energy investments. I disagree because I believe reversion to the established trend line in the oil markets can only take us back to the $70 to $80 level and many alternative energy technologies remain cost effective at that price point. Moreover, electricity prices are not likely to experience the same violent swings as oil. So the fundamental market drivers that favor the use of wind and solar power are different. Sales may decline for a time, but they will almost certainly recover with the overall economy.