Understanding the Finances Behind a Nonrenewable Resource

by Investing School on April 11, 2012

You can’t ignore the push to develop ecologically renewable energy sources, regardless of how you feel about them. For some the research into wind, water and solar power is encouraging – no matter how slowly it might go. Others feel just as strongly about the nonrenewable resource market. After all, the scarcer something becomes, the more valuable it is. Unfortunately, in the real world, things are not so clearly defined.

A nonrenewable resource is exactly what it sounds like – a source of energy which cannot be replaced once it is used. Fossil fuels are among the most commonly discussed nonrenewable resources. Coal, oil and natural gas are all used extensively in industry, and the point at which extracting and processing them will become non-viable is approaching. For the investor deciding whether to invest in what is likely to become obsolete offers both the opportunity for profit and risk.

Renewable resources are garnering a lot of interest from investors. Many of the larger investment firms are offering portfolios built upon this surge, providing funds which are built from a variety of green tech companies. Because much of this technology is still in its infancy, selecting those companies which are most likely to survive is challenging. An increasing number of firms traditionally associated with nonrenewable energy are actually investing in energy alternatives in anticipation of the expected change.

Once a sure bet, nonrenewable resources are no longer quite such a “sure thing” for the average investor. A bit of additional caution is advisable when investing in such companies.

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