Likewise, electric cars have not enjoyed the success many expected. The battery alone in an electric car costs as much as a new gasoline-powered car, and electric vehicles are not selling nearly as fast as once projected. General Motors expected to sell 60,000 Chevy Volts globally last year, but sold just half that many. Sales of Nissan's all-electric Leaf grew 22 percent around the world last year to 26,000, short of Nissan's projected 50 percent growth.
The cost of wind and solar power has declined, but the price of electricity made with newly cheap fossil fuels has fallen too, making it harder for wind and solar to compete.
"Renewables are now under scrutiny. They haven't made the kinds of quantum leaps we have seen in the oil and gas industry," says First Reserve Corp.'s Santiago, who now shuns investments in alternatives.
David Aldous, the former Shell executive, learned that lesson while trying to turn wood chips into ethanol at Range Fuels. The system that fed the chips into a gasification chamber didn't work well, and the project failed.
"Things don't always scale from the petri dish to the demo plant and then to the commercial plant. It's just part of building up a new industry," Aldous says.
Range went out of business in 2011, and it was hardly alone. Dozens of biofuel, battery and solar companies failed even though federal and state governments supported alternatives with loans and grants, and mandated their use. Others are limping along.
Pacific Ethanol, which traded near $300 per share in 2006, now trades for 27 cents. Amyris, an advanced biofuels company, traded near $34 a share as recently as last year, but now trades at $2.65. The battery maker A123 was forced to file for bankruptcy protection last year, three years after going public. An index of clean energy companies that was first traded in March 2005 is down 70 percent since then. A similar index of traditional energy companies is up 73 percent over the same period.
THE NEXT 10 YEARS
This dark period for alternative energy could last for years. With government debt soaring and no more worries about running out of oil, many renewable subsidies are being scaled back.
"The world is completely different now," MIT's Greenstone says.
But there are still hundreds of companies, including fossil fuel giants, working on new renewable-energy projects. ExxonMobil is investing in Synthetic Genomics, a company started by the geneticist J. Craig Venter to try to create strains of algae that will produce fuels. BP and Shell continue to work on ways to turn plant waste into fuels.
California, meanwhile, set the nation's most ambitious renewable energy goals and is on track to meet them. One-fifth of the power delivered by the state's three biggest utilities now comes from renewables, not including large hydroelectric dams. By 2020, that portion will rise to one-third.
President Barack Obama in March proposed using $2 billion in federal oil and gas royalties to invest in clean energy technology research. Obama is also expected to promote renewables through pollution regulations, if not with new laws.
And for all the world's newfound oil, prices are still high because developing nations are consuming more.
"It's not time to write the epitaph yet," Aldous says. Eventually the global economy will fully recover, he says, and demand for energy of all kinds will increase.
"New sources of energy are going to be in vogue again," he says.
Experts didn't see the oil and gas boom coming five years ago. It's certainly possible the world will change direction again in the next five years.
But EOG's Papa says oil and gas companies will just invest in even more sophisticated technology. He estimates that current techniques pull only 6 percent of the oil trapped in source rock to the surface. Learning to double that would yield yet another enormous trove of hydrocarbons.
"Now we go into the next phase of technology," he says. "How are we going to get the rest of it out of the ground?"
Follow Jonathan Fahey on Twitter at http://twitter.com/JonathanFahey .
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