The value of crude oil has continued to fall today, losing around 5% of its value, reaching a new 12 year low at just $29.42 a barrel. This significant drop is down to an increase in supply (Iran is expected to resume exporting crude oil, after the lifting of economic sanctions.) This will result in a greater supply of crude oil, in an already oversupplied market. China’s economic slowdown is also another key factor in the rapid depreciation in the value of crude oil. With no guarantee of China resuming to its high levels of growth, and with an increasingly crammed market, it is likely that the value of crude oil will continue to tumble.
There are inevitably some winners and losers from this recent trend. Firms who are heavy users of crude oil & crude oil products, such as airlines, may see a rise in their profits, as their costs will fall. This is dependent on them being able to maintain market share, and continue selling their goods at the same price (they could charge a lower price to stimulate more demand – this should still result in an increase in profitability.)
Firms operating in the clean tech sector can expect to see less demand for their products and less interest in green energy. Low crude oil prices may discourage governments from providing subsidies to firms in the clean tech sector, as there is not a sense of urgency (switching/finding alternatives to crude oil is not a major concern, so long as oil prices are low.) Government provided subsidies are a key component of the clean tech sector, as they can make green products (solar panels) a more viable proposition for households.
Electricity produced from renewable sources has always been, in the short long at least, much more expensive than electricity generated from the burning of fossil fuels (such as oil.) Cheaper oil will only widen this gap, and discourage electricity providers to invest in renewable energy.