The global alternative energy sector is in a depression. Alternative energy investments aren’t looking so good, and the private and public sectors around the world have lost billions of dollars. According to experts, hydraulic fracturing, or fracking as it is called, is responsible for collapsing green energy initiatives globally because it has greatly reduced the price of natural gas.
Financial incentives to go with renewable energy are long gone because natural gas is currently so inexpensive. Previously unreachable reserves have now been tapped due to technological advances in natural gas extraction from shale, including fracking.
Fracking has opened up US gas reserves to such a degree the country has surpassed Russia as the globe’s largest natural gas supplier.
The downturn is evident in the numbers. In 2008, the price of natural gas hit a high of $13 per thousand feet. By contrast, 2012’s high is $3 per thousand feet. United States Natural Gas (UNG) has fallen 39%, and over the course of a year, UNG is down 68%. Shareholders are unimpressed.
Alternative energy stock shareholders have it even worse. While the stocks are deemed notable and widely admired, shareholders do not want to touch them because they find them too risky in the current climate.
Most everyone can agree that clean energy and reduced dependence on fossil fuels is critical to the future of our planet. However, very few are willing to actually pay for the surcharge to actually live green or make the investments necessary to build a green infrastructure. Hopefully, as the price of natural gas begins to rise, emerging market investors will become interested, leading to a rebound in alternative energy stocks.