How high can oil prices go?
In April of 2020, I wrote an article titled “How Low Can Oil Go?” At one point during that period, the price of oil per barrel was incredibly low—the barrel itself cost more than its content. This black fluid has dominated the energy market for so long and its continued volatility just bewilders me. The last 10-year spread on oil is an eye-opener. On April 2, 2012, oil was priced at $106.90 a barrel. At the time of this writing, oil closed at nearly $98 a barrel. During the last 10 years, oil prices have had a wild ride like a rolling wave, climbing high and then dropping as low as $16.37 a barrel on April 13, 2020. At some point, it even dipped into negative territory for the first time in the history of its life cycle since oil was discovered was first discovered in Titusville, PA in 1859. In January 1901, a well in Spindletop, Texas struck oil that exceeded that of Titusville, commencing the Texas oil rush.
But in the succeeding decades, natural resources were eyed as alternatives. “I'd put my money on the sun and solar energy. What a source of power,” Thomas Edison said in 1931. “I hope we don't have to wait till oil and coal run out before we tackle that.” In 1954, the first solar module was tested on a pole in my backyard in Lawrenceville, NJ. But every shift in technology takes constant innovation and economies of scale to move the price points to where they are lucrative and stable enough to have the great deflection of the preceding technology. The automobile industry took 30 years to hit this deflection point and the cell phone industry approximately 27 years, and now solar energy is in the spotlight. You will never get a better investment right now than solar energy, especially in this next decade. If you invest your money in a new car, as soon as you drive it off the lot you lose 9 to 11 percent of its value. After five more years, you’ll lose another 50 percent of its value. Not a great investment. Plus, you’re dumping extremely expensive gas into this depreciating asset and don’t forget the maintenance component of your investment. On the other hand, if you invest your hard-earned money in a solar energy system, you earn a 26 percent tax break in the first year.
If you’re a business owner, you can also depreciate the purchase at 100 percent of its value in year one, getting back almost 40 percent of your investment in that first year. It will be totally paid back in less than five years and making passive income for the next 30 plus years by selling the excess electricity it generates back to the grid. Now that’s a great investment. If a solar energy system is built correctly, it can last more than 30 years. Take every other investment, even the simple ones like a cell phone, and you lose most of your investment in year one. In this very volatile world market, it’s time to protect your hard-earned money. Put your money into something that will earn money while saving money. When the utility keeps making promises that your energy bills will go down one month and raises them the next month, it’s time to control your own energy. It’s time to control your future.
Jeffrey Voacolo is the vice president and chief operations officer of Generation Renewable Inc. Send feedback to email@example.com