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Oil prices fall, will it affect the Renewable energy Sector

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Effect of Price cuts on Solar & Wind Energy Sector

The prices of oil have plummeted. IT is now just $60/ barrel as compared to $100/ barrel in July in USA. Let’s see who all will be affected. Oil is a major driving force behind our lives. The whole transportation and manufacturing industry will surely be affected. People are expecting the cost of travel to come down. However, the oil rich countries of Middle East, Saudi Arabia have decided not to curb the oil supply, in hope that the prices will go up again. The economy of these countries depend on oil prices.

The demand for oil is also cutting down in many countries. In Japan and China there is now more dependence on coal which these countries plan to replace by renewable energy. China recently passed many policies favoring and promoting renewable energy usage. Europe is suffering from slow industrial activities and unemployment, hence there is less demand of oil there too. USA has its own Shale production of oil. All these factors have contributed to the demand of oil falling. The prices have also started reducing at the gas stations.

The renewable energy sector is a different sector. It is a source of generating electricity. Thus any change in the oil price should not directly affect this sector, as it will affect the transportation industry. However, if prices further fall it might pose a far-fetched possibility to be competitive with energy prices. Solar energy has reached grid parity in many places globally. The fall in oil prices is not good for the environment at large. Solar and wind energy are the cleaner ways for a sustainable environment. Hence people should be encouraged to use renewable energy more than the fossil fuels.

“This is not your garden variety autumn price decline,” said Tom Kloza, chief oil analyst at, which reports fuel prices from filling stations across the country. “Clearly there is a rift in OPEC, and that means we are more likely to see a price war over the next six months. Crude oil is teetering on the brink of collapse.”

Source: NY Times


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

One Response so far | Have Your Say!

  1. pramod ranjan arora

    Reduction in cost of oil would not hamper in progress in renewable energy. Solar energy has almost achieved grid parity and parity with the coal based plants may be achieved within 10 to 15 years. Oil is the costliest source of energy and would remain costliest in future. Main focus of countries of world is to reduce emissions and therefore, would never turn to oil even if the cost reduces drastically.