Guggenheim Solar ETF News: Declining Oil Prices Convey A Bearish Outlook
Summary
- 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:
- Oil now serves primarily as a transportation fuel for planes, trains, boats and automobiles.
- 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.
- 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.