OPEC Could Worry about Growing Non-Fossil Fuel Consumption


Dec. 29 2015, Published 7:39 a.m. ET

Non-fossil fuels could impact OPEC

Solar and other non-fossil fuel energy consumption grew rapidly in recent years. These energy sources are renewable. They’re widely available. Experts think that OPEC (Organization of the Petroleum Exporting Countries) is already sensing this threat. It wants to make as much money as possible before the demand for oil slows down. If this fact prevails, OPEC members like Saudi Arabia and others may not cut production in the future.

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The factor that concerns the world’s top policymakers is the volatility of the crude oil supply that could arise from the civil war in the Middle East. Also, high dependence on crude oil and OPEC’s monopoly impacted large economies. The top leaders in the US (SPY), China (FXI), and India (INDY) are encouraging the use of solar energy. Fuel cells have made it possible to harness the solar energy and use it on cloudy days. Expert suggests that China is heavily investing in the R&D (research and development) activities of non-fossil fuel energy like solar energy.

Experts think that terrorists in the Middle East use crude as a major source for their financial funding. In the future, the dependence on crude could mean a large threat from terrorism.

Fuel cells and solar companies

FuelCell Energy (FCEL), Plug Power (PLUG), and EnerSys (ENS) are some of the US-based companies that manufacture and operate fuel cells. SolarCity (SCTY) deals with solar energy. ETFs like the Guggenheim Solar ETF (TAN), the PowerShares WilderHill Clean Energy ETF (PBW), and the VanEck Vectors Global Alternate Energy ETF (GEX) invest in renewable energy. The above graph shows the YTD (year-to-date) performance of PBW.

In the next part, we’ll discuss the fiscal break-even cost of different OPEC countries.


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