Received opinion seems to think so. Take a look at this piece on CNN yesterday "Sector Snap: Solar Stocks Rise" which said;

"Shares of alternative energy companies tend to rise when oil and gasoline prices climb, as investors seek to invest in companies which will benefit from government interest in other energy sources".

I think rushing into alternative energy when oil prices go up is just a bit too simplistic. Instead I would pay attention to some other metrics, each of which are quite sector-specific. Here are some of them listed below;

• Solar PV - keep an eye on silicon prices


• Hydropower - rainfall, the more there is, the cheaper the hydropower. The cost per kilowatt hour really does vary in price according to seasonal rainfall


• Wind - watch construction costs, steel costs, carbon fibre prices and average annual windspeeds.


• Energy Storage - lithium prices


• Carbon Trading - the most heavily traded carbon contracts are on the European Climate Exchange where prices are highest.


• Fuel Cells - Platinum prices

Of course, in a very broad sense, it's not wrong to say that if the price of oil goes up then interest and investment dollars will flow to alternative energy. Certainly, if the price of oil was where it was in 1999, just $10 a barrel, it's hard to see that we would not have had the boom we have been having in recent years.

All the same, I think it's more important to pay closer attention to the direct material and other cost inputs that are so important to the finished alternative energy production price.

Like anything else, if you want the truth, there's no alternative to a greater depth in knowledge. In other words, it always pays to delve a little bit deeper.

One of a handful of giant Western Oil Majors - BP - (and still a mere fraction of the size and reserves of Saudi Aramco) is taking a punt on biofuels, in a new joint venture with D1 Oils.

According to their website, D1 Oils, sees itself emerging as a biodiesel leader in;

* Agronomy - the science, planting and production of inedible vegetable oils.

* Refining - the designing, building, owning, operating and marketing of biodiesel refineries.

* Trading - the sourcing, transport and trading of seeds and seedlings, seedcake, crude vegetable oils and biodiesel.

I've thought for some time that as biofuels became a bigger and more profitable player, "Big Oil" would start to take an interest to hedge their bets against the risk of volatile oil prices and of course, their declining reserves. It seems that now this is starting to happen. BP like many traditional oil firms, was embarking on a path to get rid of the excess petrodollar cash in dividends. I sense though that in this period of sustained higher oil prices, this will not continue ad infinitum - the urge to hold onto the cash and diversify out of the core business is just too great.

As I wrote here, this problem for shareholders, known as "free cash flow dispersion" can and does create other headaches. All the same, BP could claim to be a pioneering oil firm in investing in alternative energy. They after all got heavily into the solar business some years ago and more recently in 2006 with Clipper Windpower.

Would that Saudi Aramco ever do the same !

Iranian President Mahmoud Ahmadinejad claimed Sunday his country has met a key target for its nuclear program and more than 3,000 active centrifuges to enrich uranium. Meanwhile, President Bush is turning up the heat, as well he might. It is after all, very difficult to negotiate with someone - Iran - who wants something you don't want them to have - nuclear weapons.

And speculation continues to grow that President Bush, egged on by the Vice-President, is planning a military confrontation, sooner rather than later. Leaving aside the human tragedy of any war, there is a school of thought emerging that a war with Iran would be a fillip to alternative energy stocks, because it will send the oil price through the roof. Is there strength to this argument?

Obviously, for a start, it depends a great deal on how effective the military strike is. If the Iranians were able to launch a successful counter-attack (and one is all they'd get), they just might close down the Straits of Hormuz. A far worse scenario would be if the Iranians choose to "red cell", or attack first themselves, overwhelm a few capital ships with a barrage of cheap anti-ship missiles and sink a tanker or two.

Yet far too many words have been expended on everything going wrong and the assumption that America's policymakers would sit on their hands while the world went into an "oil shock recession". That's why alternative energy investors should pay close attention to a 4 month-long war game, organised by the Heritage Foundation, that not only modelled worst-case circumstances in a war with Iran. It also came up with policy responses and using the same model, tested their effectiveness in combatting a high-oil price. One of those policy responses stands out;

Ending tariffs on ethanol - to encourage eth­anol imports and reduce retail biofuel prices.

The Brazilians have wanted this for some time, and outside of the Midwest and for shareholders in US ethanol stocks, it's hardly an unpopular move. Critically though, combined with a raft of other measures, the group's policy recom­mendations eliminated virtually all of the negative outcomes from higher oil prices.

So there we go; if there's going to be a war, there's at least a chance that it will be short, overwhelming and just might, after the first couple of weeks, even send the oil price down. Don't forget that Middle East tension is already priced in to the price of oil. Still, many people thought a drop in oil prices was possible after the war with Iraq in 2003 . . .