Another Way Oil's Price Collapse Will Screw Alternative Energy

A big source of funding for alternative energy research looks like it is at risk of drying up.

With oil prices collapsing, big oil companies plan to cut back their capital expenditures. This means eliminating spending on the core business, like exploration of new sources of oil and maintenance of current facilities. If an oil company is willing to cut down on its core spending, then it will probably cut fringe spending, like research into how useful algae will be as an alternative fuel source.

This is bad news for alternative energy research as oil companies were one of the biggest donaters to universities exploring alternative energy technology in the past two years. According to EE News (sub. req’d), BP PLC, Chevron, ConocoPhilips, Royal Dutch Shell, and Total SA, all gave various universities $550 billion.

Interestingly, EE News notes that Exxon Mobile only doled out $100 million to Stanford University all the way back in 2002. Exxon is the best positioned of all these companies to weather the downturn in the oil prices.

This is just another way the collapse in oil prices hurts cleantech research. Thanks to the low price of oil (and the recession), people are buying fewer hybrids, their heating bills are lower, and the carbon market has collapsed, just to name a few. It all adds up to a lack of urgency to find new energy sources.

With venture funding slipping and oil companies cutting back, it looks like the government will have to drive the investment in alternative energy. Good thing Obama just stimulated the economy.

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