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Impact of Higher Energy Prices on Alternative Energy Consumption and Investment Development Minimal, Says S&P Report

Posted on: Wednesday, 12 October 2005, 15:00 CDT

NEW YORK, Oct. 12 /PRNewswire/ -- Despite high fuel prices and worries over global warming associated with the burning of fossil fuels, most alternative sources for energy continue to rely on government subsidies to be economical, says Standard & Poor's in a special report to be published on Monday, October 17. In the absence of government policies specifically intended to encourage sustainable options to the consumption of oil, Standard & Poor's concludes that it will be difficult to expand significant use and availability of substitutes. The report is part of a broad Standard & Poor's study on the impact of higher energy prices on markets and industries appearing in next week's CreditWeek, the investment research leader's weekly magazine on credit risk.

According to Tina Vital, a senior equity analyst at Standard & Poor's, although tax incentives in the government's Energy Policy Act of 2005 provide a short-term boost to certain renewable energy projects, such as wind, over the next few years, they may be too small to encourage oil companies either to hike existing oil & gas production, or finance the long-term development and growth of other options. Among the renewable energy sources she examines are hydroelectric, wind and solar power as well as geothermal and biomass technologies, including ethanol.

"Most of the supermajors, such as BP, Chevron, Royal Dutch Shell and Total, are building renewable energy businesses with a long-term view," say Ms. Vital. "But with returns for renewable technologies lagging, some energy companies have written down or limited their investments in renewable technologies. However, with oil prices soaring, investment opportunities in alternative fuel technologies, such as gas-to-liquids and coal-to-liquids, have become more attractive.

An early copy of Ms. Vital's article can be obtained by contacting the media representative below. This and additional energy-related articles in CreditWeek will be posted on Standard & Poor's website on Monday, October 17. In addition, Standard & Poor's will hold a telephone conference call on Monday, October 17 at 10:00 a.m. Eastern Daylight Time, to discuss the impact and credit implications of high energy prices on the U.S. and overseas economies, and on specific industry sectors.

Dial-in information is as follows: Live-Dial-In-Numbers: US/All Others: 1-888-324-0379 UK: 44-20-7943-5370 JAPAN: +81-3-5539-5153 Hong Kong: +852-2286-5631 Conference ID#: 3237346 Passcode: SANDP Replay Number: 1-203-369-3282 Replay will expire on Monday, October 24, 2005 About Standard & Poor's

Standard & Poor's, a division of The McGraw-Hill Companies , is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With approximately 6,300 employees located in 20 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com/.

Standard & Poor's

CONTACT: Michael PriviteraVice President, Public Affairs(212) 438-6679michael_privitera@standardandpoors.com

Web site: http://www.standardandpoors.com/

Source: PRNewswire

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