Lux Investing
Who would choose to invest money into risky technologies to reduce gas dependence when oil is making so much ?
When the technologies are mature and are making money is the time to invest in them.
Public Comments
- Certainly, the oil companies have no incentive to develop new technology, as they are making plenty of money already. But Entrepeneurs who think that they can profit by selling technology to reduce or eliminate dependance on oil energy. While gas prices are so high, they might think they have a product that people will happily pay a lot for, if its still cheaper than oil-derived energy. Your question relates to the development lifecycle. Of course, everyone would love to invest in a safe, mature technology that makes lots of money. But how does it get to be so mature and profitable? Because investors / entrepeneurs may be willing to take a risk in investing in technologies early, and making a huge fortune later. Not every investor has an appetite for risk, but many do: generally, the riskier the project, the higher the potential reward. A classic example is Rockefeller's Standard Oil holdings in the 1800 or 1900s. It was an immature technology, very few wells existed, but he saw the potential and took a risk on this early technology. As a result, he was one of the worlds richest men before the first cars were even produced en-masse. High gas prices are actually an incentive to energy innovation. During the 70s when there was an oil crisis, many americans switched to cars with more fuel efficient technology - because the high cost of oil gave them a good reason to. In 10-20 years we'll probably look back on gas prices today and say the same thing...that extortionate prices encourage innovators to come up with something better. If oil prices were cheap nobody would care too much about new technologies
