Gas Pressure or Game Changer

April 30th, 2008 · No Comments · Print This Post

While oil continues its meteoric rise into uncharted price territory, the real story is how this is playing out with consumers. Plagued by an anemic economy and the lowest consumer confidence index in the last 16 years, the people at the pump are being hit especially hard. When gas reached $3 last summer most consumers looked at it more as a fluke than a trend and did not adjust there driving habits accordingly. With gas pressing past $4 per gallon and with the realization that $3 gas was actually cheap; consumers are finally starting to change their spending habits.

Recently, when diesel went zooming past $4 per gallon the entire independent truckers of America (which comprises well over 60% of trucks on the road) decided to do a one hour sit out and pull their trucks off the road in a massive country wide protest. That event denotes the severity of the gas problem and illustrates the dependence of fuel in how commerce works in this country.

What most haven’t taken note of yet is that $4 gas is really changing the way people and businesses spend money. SUV sales are down substantially and the long-term outlook is even worse. Consumers want more efficiency, they want Hybrids, battery powered vehicles and alternative fuel sources. The result of this demand? We are fundamentally changing the financial landscape. Whatever you wish to call it; greentech, cleantech, alternative energy etc. it all boils down to a major shift in capital deployment by the major domestic funds. Regardless of being a venture capitalist, private equity group or even an investment banker, the theme of “alternative” is playing out in a major way across the country. Solar companies, battery technologies, alternative fuel vehicles are all garnering an enormous share of investment capital. The sheer amount of new funds propagating in the greentech sector is mind boggling.The financial landscape is changing and that change will see billions and billions of dollars poured into this alternative sector, where consumers will ultimately see amazing changes being pushed through by this deployment of capital. I believe the changes will be similar to the biotech/ medical tech revolution that took place in the past 30 years. The capital that was poured into biotech enabled better treatments to come to market faster, it allowed a host of medicines to be discovered and has changed the way we live our lives. This greentech initiative has the potential to have the same effect. So folks, I think we have to look at this shift as more than just “gas pressure”, we have a “game changer!”