A Call For Patience Amongst Political Turmoil

Our goal at at GreenTech Opportunities is to present subscribers with stocks that have attractive valuations, The upside of the past few months is that we are now dealing with more attractive valuations across several of the cleantech sectors that we follow. We are also seeing a few glimmers of new political support for increased cleantech investments from various governments. In China, we’ve just seen the first Feed-in Tariff law come into existence, promising solar PV developers 18 US cents per kWh of electricity for installations built by the end of 2011. With China having some of the most ambitious targets in the world for new solar PV installations by 2015, it is good to finally see concrete policies being put into place in that country.

In contrast to China, the federal US government has not moved nearly as aggressively towards facing up to the challenges of being over-leveraged to oil. While most economic commentators tied the 2008 Financial Crisis to subprime mortgages and a massive housing bubble, the reality is that high oil prices also played a significant role in triggering the economic downturn. This is a harsh reality that most politicians in Washington, as well as most economic writers in the mainstream press, continue to be largely ignorant of. Economists such as James Hamilton (University of California, San Diego) have pointed out that: “Something in addition to housing began to drag the economy down over the later period, and all the calculations in the paper support the conclusion that oil prices were an important factor in turning that slowdown into a recession.” While he recently stated that the high oil prices of 2010 and early 2011 would not lead to a new recession, he did write that “they're undoubtedly one contributing factor in the recent weakening.”

It’s clear that the US addiction to oil (and the attendant high prices) is affecting its indebtedness, and therefore the broader economy. However, apart from a few US states (eg. California and Oregon), few politicians at the federal level are willing to wake up to these new challenges and push for a different approach that will move the US off of its current track. With the debt ceiling negotiations now largely settled (thankfully), one hopes that the 2^nd half of 2011 will see Washington at least attempt to address the country’s addiction to oil.