Considering the extent of oil spillage happening from the Gulf of Mexico and the dangers looming large on the environment due to that, has left the investors of these oil and gas exploration companies perplexed on their investment preferences.

As and how the gravity of the oil spillage started coming to the knowledge of the investor community, they showed a trend of exit from the traditional oil and gas exploration companies and diverted their funds towards alternate energy companies.

The analysis of past few trading sessions on the US bourses clearly indicated that investors had been continuously withdrawing their funds in a sustained manner, which was evident from the depreciation in the stock prices of oil and gas exploration companies.

Oil giants in the US like, Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX) and ConcoPhillips (NYSE:COP) have witnessed constant erosion in stock pricing over past one week.

Exxon Mobil fell by 0.18% to USD 60.77 per share since May 26, 2010, while, Chevron fell by close to 0.5% to USD 74.13. However, ConcoPhillips somehow maintained positive trend with gains of close to 2% in past five trading session and ended the day at USD 52.49 on Wednesday.

But, BP Plc (NYSE:BP), from whose well, this spillage incident had occurred, had to face the double whammy, wherein on one hand the company incurred huge losses in terms of loss of valuable crude oil, while on the other, the stock price valuation of the company also received a huge jolt.

Considering the past five-day trading sessions, BP Plc stocks fell by as much as 14.14% to USD 37.66 recently. The world's fourth-largest company has apparently lost $74.4 billion, or 40 percent, of its market value since the oil spillage started six weeks back in April this year.

This erosion of stock valuation seems to have made investors jittery to stay invested in the traditional oil and gas sector. Hence, they explored yet another option for energy stock investments, which came in the form of algae biofuel investment sector, which has now become the most sought after sector according to the Wall Street insiders.

The analysts find this sector to be most attractive after the concerns raise about the hazards of traditional oil sector. Algae Oil is now a top contender to what is now commonly referred to as a 'third-generation' biofuel clean energy. The reasoning could lie in the fact that previously, very little information was provided on algae used as a biofuel feedstock. As research increases, so does the level of interest and investment.

The investors' preference towards biofuel energy as an alternative destination for investments in place of conventional oil and gas sector is seen rising after the incident of the oil spillage and especially post the situation getting worse with expansion of spillage.

Investors went on a buying spree for the biofuel energy stocks. Orilinoil Inc (NASDAQ:OOIL) gained over 8.5% to USD 0.239 in past five trading sessions, while Verenium Corporation (NASDAQ:VRNM) gained over 7.2% to USD 3.11 during the period.

New Generation Biofuels Holdings Inc (NASDAQ:NGBF) zoomed up to USD 0.620 posting maximum gains of 10.7% followed by BioFuel Energy Corporation (NASDAQ:BIOF), which rose close to 9% at USD 1.97 since May 26, 2010.

The buoyancy in the biofuel energy stocks clearly indicates the changing preference of energy sector investors. Besides these fairly smaller players, several large energy companies like Exxon Mobil, which has a $600-million algae program, Boeing, Shell, ConocoPhillips, BP PLC and Chevron are also seen investing in biofuels such as algae for cars, trains and alternative jet fuels.

Presently, there are three publicly traded Algae Biofuel companies. PetroSun and more recently OriginOil and PetroAlgae have also gone public. PetroAlgae is also the industry high flyer, and is doing some interesting work growing duckweed.

Additionally, the U.S. DARPA has provided $35 million to San Diego-based companies SAIC and General Atomics to pursue the creation of algae-based jet fuel.

This, joined with the investors' confidence, would surely bring a sea-change for the biofuel companies. But, will the buoyancy in the traditional oil stocks fade away with the introduction of alternative energy sector equities? Will the BP oil spillage prove an unforgettable blow to the entire oil-based economy? Only the time will tell, if the governments have also recognized the need of the alternative energy sector or not. (with inputs from