Dfds
Alternative Investments:
Alternative Energy and Oil: Literature review
Kevin Meyer, Kevin@meyermail.ch Submitted 12/04/2010
Executive Summary
Research Purpose
In order to build a financial product on a sound theoretical basis, I analysed the literature available on or related to the topic: “Alternative energy and Oil”. The aim is to verify the hypothesis of correlation between the variations of the price of oil and alternative energy companies‟ stock valuation.
Research Design
I searched on internet (Google scholar, SSRN, P&P) for papers related to the topic (selected by number of quotes), and went across a comprehensive analysis of the sub-topics present in the studies. I then looked at the similarity or contradictions in the conclusions and presented the regression methodology.
Findings
The available literature on the topic, to this day, seems to agree to a positive and significant Beta on the variation of the price of oil, when looking at the alternative energy companies‟ stock value.
Research Limitations
There are only three papers directly related to the specific topic, all the other analysed papers giving more depth to the subject but not answering the original question. Also, the turmoil of the financial market of the past years has provoked perturbations which make predictions less accurate.
Research Implications
In the papers analysed, all academics and professionals agree to the fact that alternative energy will develop in the future as a necessity. It is important for an investor to understand the role that this sub-sector will play in the future. Furthermore, the role of the variation of the price of oil on the value of alternative energy companies‟ stock value is important and has to be taken in account when investing in these companies.
Originality and Value
Due to the recency of the topic, very little conclusions have been made on the subject. By analysing the most recent and important papers on the broad topic and all
Alternative Energy and Oil: Literature review
Kevin Meyer, Kevin@meyermail.ch Submitted 12/04/2010
Executive Summary
Research Purpose
In order to build a financial product on a sound theoretical basis, I analysed the literature available on or related to the topic: “Alternative energy and Oil”. The aim is to verify the hypothesis of correlation between the variations of the price of oil and alternative energy companies‟ stock valuation.
Research Design
I searched on internet (Google scholar, SSRN, P&P) for papers related to the topic (selected by number of quotes), and went across a comprehensive analysis of the sub-topics present in the studies. I then looked at the similarity or contradictions in the conclusions and presented the regression methodology.
Findings
The available literature on the topic, to this day, seems to agree to a positive and significant Beta on the variation of the price of oil, when looking at the alternative energy companies‟ stock value.
Research Limitations
There are only three papers directly related to the specific topic, all the other analysed papers giving more depth to the subject but not answering the original question. Also, the turmoil of the financial market of the past years has provoked perturbations which make predictions less accurate.
Research Implications
In the papers analysed, all academics and professionals agree to the fact that alternative energy will develop in the future as a necessity. It is important for an investor to understand the role that this sub-sector will play in the future. Furthermore, the role of the variation of the price of oil on the value of alternative energy companies‟ stock value is important and has to be taken in account when investing in these companies.
Originality and Value
Due to the recency of the topic, very little conclusions have been made on the subject. By analysing the most recent and important papers on the broad topic and all
Cited: Bleischwitz, R., & Fuhrmann, K. (2006). Introduction to the special issue on hydrogen in „Energy Policy‟. Brook, A.-M., Price, R., Sutherland, D., Westerlund, N., & André, C. (2004). Oil price developments: Drivers, Economic consequences and Policy. Cicerone, R., Orr, J., Brewer, P., Haugan, P., Merlivat, L., Ohsumi, T., et al. (2004). The Ocean in a High CO2 World. Cooper, J. C. (2003). Price elasticity of demand for crude oil: estimates for 23 countries. Cox, P. M., Betts, R. A., Jones, C. D., & Spall, S. A. (2000). Acceleration of global warming due to carbon-cycle feedbacks in a coupled climate model. Gan, L., Eskeland, G. S., & Kolshus, H. H. (2005). Green electricity market development: Lessons from Europe and the US. Henriques, I., & Sadorsky, P. (2007). Oil prices and the stock prices of alternative energy companies. McDowall, W., & Eames, M. (2006). Forecasts, scenarios, visions, backcasts and roadmaps to the hydrogen economy: A review of the hydrogen futures literature. Popp, D. (2006). R&D Subsidies and Climate Policy. Rifkin, J. (2002). The Hydrogene economy. Sadorsky, P. (2009). Renewable energy consumption, CO2 emissions and oil prices in the G7 countries. Schmitz, A. (2009). Effect of Oil Prices on Returns to Alternative Energy Investments. Tanton, T. (2008). Oil and Gas Industry Investments In Alternative Energy, Frontier Hydrocarbons and Advanced End-Use Technologies: An Update. Truck, S. (2008). Oil Price Dynamics and Returns of Renewable Energy Companies. Literature review: Alternative energy and oil Page 12