Low Oil Prices – End of Beyond Oil Investment?

By: Meir Javedanfar

18/12/2008

In mid July 2008, oil prices were $147 per barrel. Today, they stand at $40. That’s a fall of almost two thirds. History has taught us that the lower the price of oil, the less money governments have at their disposal to invest in Beyond Oil future industries.

However, the world of 2008 may be different. This time, due to restructuring in major industries, such as the automotive sector in the US, green industries are likely to make a come back, despite the low oil prices.

It is understood that even if the auto sector bailout is approved later on, it will be a temporary lifeline to allow these companies to go bankrupt slowly and in a more orderly manner, instead of a spectacular crash.

These events are going to encourage investors to look for new industries in the stock exchange, which have potential for growth. It's likely that biotech, agriculture technology, and green technology, especially those specializing in low emission transportation technology are going to benefit. This adjustment is likely to compensate part of the expected loss from low oil prices.

What is important to note is that although not all loses will be recovered, the recent developments are going to encourage a larger involvement of the private sector in the Beyond Oil industries, and this is likely to set a trend for the future. As the saying goes "give a man a fish, you feed him for a day. Teach him how to fish, and you feed him for the rest of his life".