GreenBeat

Banks and financial institutions are in trouble, but some side affects of the financial crunch may be even worse. The dollar dropped precipitously today, helping to drive what news agency AFP is calling the biggest one-day dollar gain ever for oil. A barrel of crude for October delivery hit $120.92, over a $16 increase for the day.

Traders are blaming the price hike on a drop in the dollar’s value, and a flight to the commodities markets as stock prices fall. There are more factors in play, but even the experts are bad at analyzing them in sum: Most financial institutions were predicting a drop in oil, prior to today. However, on the other end of the causal chain, the obvious beneficiary would seem to be cleantech.

There are a couple reasons that may not be true. As Barron’s pointed out this morning, falling prices would likely boost consumer spending. The opposite holds true for rising prices, which could help dent the tech sector, which has so far been somewhat resilient. Expensive cleantech will likely fall in the same boat. Consumers already paying more at the pump will be loath to shell out for, taking just one example, expensive solar power.

But the bigger problem for many cleantech outfits will be the rising commodity prices, of which oil is just a part. Prices for silver, aluminum, steel and other materials are ticking up as well. The costs of those same materials are a major component of installations like solar thermal projects and wind farms. And higher prices could hurt demand for other products as well, like expensive electric cars and bikes.

On the upside, volatile prices for oil might drive home the growing instability of that market, leading to more political pressure for cleantech. Keep an eye out — whichever way energy goes, the change is likely to be big.

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