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Alternative Energy Has Little Effect on Traditional Energy Commodities

By Amine Bouchentouf

As the global population increases and emerging countries industrialize, the demand for energy commodities will rise throughout the first quarter of the 21st century. The Energy Information Administration (EIA) anticipates that global demand for energy products will increase by more than 70 percent between 2003 and 2030.

[Credit: Source: Energy Information Administration]

Credit: Source: Energy Information Administration

In 2009, fossil fuels (oil, natural gas, and coal) accounted for 85 percent of total energy consumption. Crude oil alone was responsible for almost 40 percent of global energy use. However, as the price of these traditional energy sources increases (driven by both strong demand and limited supply), the calls for new sources of energy are increasing as well.

For example, in 2005, many members of Congress pushed for an alternative energy initiative to promote the use of solar, wind, and other renewable energy sources.

Despite numerous calls, however, the energy landscape is unlikely to change anytime soon, which means that fossil fuels will remain the dominant source of global energy for years to come. Alternative energies may generate a lot of attention, but how much actual progress will be made is still up in the air. Keep this in mind as you’re looking at investing in these alternatives.

You can see that the energy picture until 2030 will remain fairly static on a percentage basis; fossil fuels will continue to be the dominant fuel for the global economy, and alternatives will keep playing an important but less significant role.

[Credit: Source: Energy Information Administration]

Credit: Source: Energy Information Administration

Despite the dominance of fossil fuels, particularly crude oil, the alternative space is a dynamic area and a fertile ground for investment opportunities.