Considering the extent of oil spillage happening from the Gulf
of Mexico and the dangers looming large on the environment due to
that, has left the investors of these oil and gas exploration
companies perplexed on their investment preferences.
As and how the gravity of the oil spillage started coming to the
knowledge of the investor community, they showed a trend of exit
from the traditional oil and gas exploration companies and diverted
their funds towards alternate energy companies.
The analysis of past few trading sessions on the US bourses
clearly indicated that investors had been continuously withdrawing
their funds in a sustained manner, which was evident from the
depreciation in the stock prices of oil and gas exploration
Oil giants in the US like, Exxon Mobil Corporation (
), Chevron Corporation (
) and ConcoPhillips (
) have witnessed constant erosion in stock pricing over past one
Exxon Mobil fell by 0.18% to USD 60.77 per share since May 26,
2010, while, Chevron fell by close to 0.5% to USD 74.13. However,
ConcoPhillips somehow maintained positive trend with gains of close
to 2% in past five trading session and ended the day at USD 52.49
But, BP Plc (
), from whose well, this spillage incident had occurred, had to
face the double whammy, wherein on one hand the company incurred
huge losses in terms of loss of valuable crude oil, while on the
other, the stock price valuation of the company also received a
Considering the past five-day trading sessions, BP Plc stocks
fell by as much as 14.14% to USD 37.66 recently. The world's
fourth-largest company has apparently lost $74.4 billion, or 40
percent, of its market value since the oil spillage started six
weeks back in April this year.
This erosion of stock valuation seems to have made investors
jittery to stay invested in the traditional oil and gas sector.
Hence, they explored yet another option for energy stock
investments, which came in the form of algae biofuel investment
sector, which has now become the most sought after sector according
to the Wall Street insiders.
The analysts find this sector to be most attractive after the
concerns raise about the hazards of traditional oil sector. Algae
Oil is now a top contender to what is now commonly referred to as a
'third-generation' biofuel clean energy. The reasoning could lie in
the fact that previously, very little information was provided on
algae used as a biofuel feedstock. As research increases, so does
the level of interest and investment.
The investors' preference towards biofuel energy as an
alternative destination for investments in place of conventional
oil and gas sector is seen rising after the incident of the oil
spillage and especially post the situation getting worse with
expansion of spillage.
Investors went on a buying spree for the biofuel energy stocks.
Orilinoil Inc (
) gained over 8.5% to USD 0.239 in past five trading sessions,
while Verenium Corporation (
) gained over 7.2% to USD 3.11 during the period.
New Generation Biofuels Holdings Inc (
) zoomed up to USD 0.620 posting maximum gains of 10.7% followed by
BioFuel Energy Corporation (
), which rose close to 9% at USD 1.97 since May 26, 2010.
The buoyancy in the biofuel energy stocks clearly indicates the
changing preference of energy sector investors. Besides these
fairly smaller players, several large energy companies like Exxon
Mobil, which has a $600-million algae program, Boeing, Shell,
ConocoPhillips, BP PLC and Chevron are also seen investing in
biofuels such as algae for cars, trains and alternative jet
Presently, there are three publicly traded "Algae Biofuel"
companies. PetroSun and more recently OriginOil and PetroAlgae have
also gone public. PetroAlgae is also the industry high flyer, and
is doing some interesting work growing duckweed.
Additionally, the U.S. DARPA has provided $35 million to San
Diego-based companies SAIC and General Atomics to pursue the
creation of algae-based jet fuel.
This, joined with the investors' confidence, would surely bring
a sea-change for the biofuel companies. But, will the buoyancy in
the traditional oil stocks fade away with the introduction of
alternative energy sector equities? Will the BP oil spillage prove
an unforgettable blow to the entire oil-based economy? Only the
time will tell, if the governments have also recognized the need of
the alternative energy sector or not.
(with inputs from PRLog.org)