Alternative
energy gains political power
By Brian Gorman
The Motley Fool
Washington
Petroleumworld.com 01 18 06
Popular
pundits often describe globalization in glowing terms. True, there
are many benefits to global trade, including lower prices, greater
efficiency, and higher wages. However, increasing interdependence
also can lead to conflicts with potentially far-reaching consequences.
A case in point: Russia's shutdown of natural gas lines to the
Ukraine, which may prove to be a boon for alternative energy companies.
In
retrospect, this seems like a relatively minor crisis, since it
lasted just two days. But a recent New York Times article suggests
that the impact could be far bigger. When Russia cut off natural
gas supplies to its neighbor, Western European countries were
alarmed, believing that their natural gas supplies would also
be disrupted. The worries were understandable -- Russia supplies
France and Italy with as much as 30% of their natural gas, and
Germany with 40% of its natural gas.
In
the crisis' aftermath, many European officials and experts are
calling for a reduction in dependence on Russian gas, partly through
the development of alternative fuels such as clean-burning coal,
nuclear power, and renewable energy. Western European countries
have invested or are currently investing in these areas, but that
spending could grow. In addition, newer European Union members
in Central and Eastern Europe, which are even more dependent on
Russia, could be big investors in these areas.
While
it's possible that nuclear power players like Cameco (NYSE: CCJ)
could benefit from the new attitude in Europe, Europeans' strong
environmentalist streak is likely to block any major increase
in nuclear power production. Instead, companies involved in coal
technology, such as Headwaters (NYSE: HW), McDermott (NYSE: MDR),
and Sasol (NYSE: SSL), are more likely winners. In addition, big
energy companies like BP (NYSE: BP) with investments in renewable
fuel, along with smaller pure-plays like SunPower (Nasdaq: SPWR),
stand a good chance at reaping new business.
It
might be tempting to believe that the Russia/Ukraine crisis was
just an anomaly with few long-term effects. Skeptics, though,
should note that the U.S. has its own potential energy issue in
its strained relationship with Venezuela, which provides the U.S.
with 15% of its crude oil and now seeks to reduce its dependence
on U.S. purchases. Concerns over energy security seem likely to
grow rather than subside, and smart investors should be ready
to exploit this trend.
Further
energetic Foolishness:
A Healthier Glow for Nuclear Power?
Clean Coal Cranks Up
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Fool
contributor Brian Gorman is a freelance writer in Chicago. He
does not own shares of any companies mentioned in this article.
The
Motley Fool, January 05, 2006
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© 2006The Motley Fool. All rights reserved
