Slow Economy Hurts Alternative Energy

The slow economy in the US is hurting even the growth of the hottest alternative energy industry. Investment in the sector shrunk in the past few months and stock prices slumped.

WSJ says winds shift for alternative energy when oil price sinks and money gets tight. Oil price halved to $70 a barrel in October from its peak of $147 a barrel in February. The price drop in oil has taken away the viability of alternative energy since investors are worried whether the market will be big enough for alternative energy to be profitable.

The credit crisis is not helping either. As Americans spend less and drive less, the demand for energy has decreased. The slowdown of oil consumption leads many people to believe, at least temporarily, that the clean energy investment can be put off.

In a bleak economic environment like this, alternative energy will have to compete for government funding with industries like finance. $700 billion tax payers' money have been used to inject in the ailing banking system. As Americans making less, the government is collecting less tax, and, thus, will have a hard time to fund all the projects. Even though both of the presidential candidates make clean energy an important part of their campaigns, but it's hard to say which sector the new-elected government will end up cutting if the economy doesn't pick up soon.

One silver lining is OPEC has announced a few days ago to cut oil production by 15 billion barrels a day in order to tighten supplies hoping to move the oil price higher, as NYT reported. But some analysts are worried containing the oil supply will result in a slower economic recovery. For alternative energy industry, a booming economy, instead of manipulatedly increased oil price, is the real rescue.