Why renewable sources are affecting the price of oil

Renewable sources and the price of oil

2008

Renewable sources and the price of oil

Energy Crisis

The development of economy in a country would directly causes the increasing demands for electricity and other kind of energy . Gasoline is one typical non-renewable source that is currently in high demand due to the increasing number of vehicles , manufacturing plants , and machineries

The surge in oil demands has influenced the rise of oil price within the past one year . During the period , the price of crude oil continues rising . In April

2007 , for instances , the crude oil price was still at 60 per barrel but one year later on April 22 , 2008 , the oil was traded at 116 .26 . The rise of important commodity immediately causes the rise of other commodity like food , transportation , vehicles , and many others which in turn cause the inflation . Figure 1 shows the oil price within the past one year , highlighting the unbelievable increase in oil price

Figure 1 Crude oil price as of April 22 , 2008

Source : http /www .oil-price .net The surge in the oil price has encouraged scientists to develop alternative energy for powering machineries , fueling vehicles and many more . The development of alternative energy also intends to reduce the dependence on oil as energy resources . Currently , the world 's energy production is currently generated by : oil (40 , natural gas (22 .5 coal (23 .3 , Hydroelectric (7 .0 , Nuclear (6 .5 ) and others (0 .7

Renewable Energy Sources and Influence on Oil Price

However , because fossil fuels , our most valuable source of energy , is known to have strong connections with worldwide environmental problems such as global warming , acid rains and pollution , efforts to find new sources of energy had receive increasing attention . Some energy alternatives are the fuel cell technology , hydrogen fuel , methanol , bio fuels , solar energy , tidal energy and wind energy . Figure 2 shows the use of alternative energy in the UK that generates 14 ,171 GWh of electricity as of 2004

Figure 2 Use of Energy in UK (2004

Source : Aepuk , 2005

The figure suggests that UK and other developed countries already use many kind of alternative energy to test the effectiveness and efficiency and the most important to reduce the dependence on oil as the main energy sources nowadays that shows no sign of declining price

The increasing price of oil highlight the number of alternative energy does not help the reduction of oil price . There are a number of reasons behind this fact . First , oil still becomes major energy that would probably last over twenty years . This means that as long as oil commodity still has many reserved , majority of users or consumers still depend on it and therefore , the price will follow supply and demand rule and other influencing factors (Qurrent , 2008

Second , oil price is in fact influenced by many aspects more than just supply and demand . This is due to there are a number of parties that determine the oil price they are cartels like OPEC (Organization...