The oil sector is at its rock bottom this year. Some of the events spiraling down to this statement include the massive oil price crash four months ago and the shelter-in-place measures due to the coronavirus outbreak. Therefore, investors should cash into renewable energy stocks. Below is an illustration of why it is crucial to invest in renewable energy stocks and their shares being far ahead of the oil shares.
Although the oil stocks may seem far from recuperating in this period, the Pew Research Center submits that petroleum is the dominant energy source in the US. The challenge is that a high percentage of oil goes into the transport industry. The US heavily depends on petroleum fuels for power-consuming processes like running ICE cars.
Petroleum-based fuels have a preference in the transport industry because of their feasibility. For instance, liquid fuel is manageable less bulky than coal. However, natural gas and other energies are more reliable in terms of efficiency than petroleum-based fuels. With close to 70% of petroleum produced spiraling to the transportation industry, it is harmless to conclude that the transportation industry solely determines the life of the oil stocks.
Currently, the challenge is that the transport sector is in recess due to the coronavirus pandemic. There is no significant automotive line that is active, including the aviation line. Many people are working at home due to the shelter-in-place measures, limiting the demand for petroleum fuel. Additionally, most businesses have shut down, minimizing the number of business people who use petrol cars.
The International Energy Agency (IEA) anticipates the demand for oil to go down by 9.3 million barrels daily. Analyst articulate that this drop is one that this industry is likely never to recuperate. It seems that renewable energy is the only sector doing well, although its use is limited to electricity generation. Nonetheless, the electricity consumption went down by approximately 15% since commercial and industrial facilities closed down.
Surprisingly, investments in renewable energy are rising, with the latest beneficiary being the offshore wind projects. This news is a source of joy for renewable energy companies like Brookfield Renewable Partners and Atlantica Sustainable Infrastructure since cash will be gushing into their projects. Renewable energy companies anticipate massive growth in this decade, contrary to the oil industry, which is currently between a rock and a hard place.
Finally, it is wise to invest in renewables since they have a high possibility of existing in the coming years. This move is appropriate considering that electric vehicles will be indirectly cushioning the shares invested in the renewables.
