Guggenheim Solar ETF News: Declining Oil Prices Convey A Bearish Outlook


  • Most recent articles suggest there is no relationship between oil and renewable energy anymore.
  • My analysis suggests most points are largely irrelevant or wrong, and are mostly affected by wishful thinking.
  • Guggenheim Solar ETF and Crude Oil’s Correlation suggests the two have a moderate to strong relationship.

Most recent articles foolishly claim renewable energy is no longer correlated to oil prices, and a rather weak correlation remains. The various arguments are:

  1. Oil now serves primarily as a transportation fuel for planes, trains, boats and automobiles.
  2. Natural Gas (Large competitor of renewable energy) used to be strongly correlated with oil; however, fracking has drastically reduced U.S. natural-gas prices over the past few years while oil prices remained sky-high, thus natural gas prices will not go down now that oil is declining.
  3. Grid parity (Different sources of energy being able to deliver electricity at the same cost) is shrinking as renewable energy costs are declining due to innovation.

As a renewable energy advocate I would not want to see this big of a hurdle stagnate the growth of the industry. I am sorry to burst some fan boys’ bubbles, but if oil prices decline, renewable energy will as well, it’s simple economics.

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