Though one could argue that this kind of innovation in derivatives may be what led to the credit crunch in the first place :)
9 years ago
Container Derivatives
Interesting trade done in container derivatives - http://www.risk.net/energy-risk/news/1636814/first-container-derivatives-trade-herald-booming-market
Tax probe in to Emissions Trading - arrests made
Germany’s probe into possible tax evasion linked to trading of emissions allowances has led to law enforcement action in at least nine other European countries, including arrests in the U.K.
Link to Bloomberg article
Could this result in more wide sweeping changes to the way VAT is treated; perhaps similar to the recent developments in Norway for domestically traded emission allowances?
Gazprom losing ground
A very interesting analysis of an FT article written recently about Gazprom’s apparent drop from the “untouchable” status they’ve held in Russia as well as some of their gas woes.
SolArc wins Eco-Energy
Eco-Energy – one of the biggest mid-stream bio-fuel companies in North America – has recently chosen SolArc’s RightAngle product to support their growing business.
Article: Eco-Energy Selects SolArc RightAngle to Support Alternative Energy Supply Chain
Daylight Savings Time is an energy hog
If you thought that DST was a waste of time and a huge pain, here's some new research that bolsters that view, at least from the energy-saving perspective - a new study shows that DST actually uses more energy than it saves.
http://www.physorg.com/news187946326.html?xid=rss-fullcontent
http://www.physorg.com/news187946326.html?xid=rss-fullcontent
OpenLink scores highly in the 2010 Energy Risk awards
OpenLink has scored first place in 11 different categories – including best ETRM package – in this years Energy Risk awards. For a summary article see:
OpenLink Sweeps the Boards in Energy Risk Survey 2010 | bobsguide, 16 March 2010
Wind Politics
An interesting article in Scientific American about how competing interests in the North American power market are contributing to a variety of legislation to curtail wind power:
Will Politics Slow the Wind? | Scientific American, March 2010
China seen overtaking US as biggest oil importer in 2-3 years
According to Platts data, the difference between US and Chinese crude oil imports is now 3 million barrels per day. This figure has fallen by half, from 6 million b/d, over the past year.
“In two to three years, China will be the largest global importer of crude oil,” Jorge Montepeque, global director of market reports for Platts, said at today’s Global Outlook for Oil event during IP Week.
This prediction threatens to redraw global crude imports trends sooner than many are expecting.
“In two to three years, China will be the largest global importer of crude oil,” Jorge Montepeque, global director of market reports for Platts, said at today’s Global Outlook for Oil event during IP Week.
This prediction threatens to redraw global crude imports trends sooner than many are expecting.
ETRM Vendors on the Move
There have been a number of press releases in recent days with regards to ETRM/CTRM product vendors:
- OpenLink | Acquires SMARTsoftware for Agricultural, Soft, and Biofuel solutions. This is another illustration of vendors wanting to extend focus beyond just an “energy” footprint into the larger “commodities space” and it appears that the physical characteristics of these products means acquisition is the fastest mechanism to improve footprint as well as establish a customer base and storyline with that customer segment.
- CTRM Vendors | CTRM vendors look to M&A for functional growth. Another article that looks at the overall trend of using M&A to achieve growth in the product vendor space.
- SolArc | Inks big deal with SHV. SolArc is continuing to have great success with business whose business has a lot of physical movement.
- TPT | Acquires Enerbility Software for easy integration of back office STP. Operational effectiveness has been a push for many years in the Credit and Equities markets and the desire to achieve lower operational risk and refocus human resources to more leveraged areas is clearly making its way into Commodities now too. The interest in “documentation solutions” (e.g., storage, workflow, generation, and confirmation) is showing up as a strong goal across all asset classes in 2010 and Commodities specific solutions – like Enerbility – are starting to gain focus.
Hedge Funds Are Placing Record Bullish Bets On Oil
Unlike small speculators, who lack the firepower to move prices and have generally been on the wrong side of trades, large speculators tend to be the market movers.
Gensler calls for tighter regulation of dealers
Commodity Futures Trading Commission (CFTC) chairman Gary Gensler refused to detail a timetable for imposing position limits on energy traders today, but called for tighter regulation of dealers in over-the-counter derivatives.
Bio Diesels making a comeback?
Are bio diesels making a comeback? The recent initiatives around energy efficiency are leading to a renewed focus on rail transportation of goods (see Berkshire Hathaway's recent investment) and diesel in general.
At least one company thinks so: Valero has just made a big investment in jatropha. We had heard of this plant a few years ago when it was going to the solution to the world's fuel problems followed by a couple of years of silence and unkept promises.
This plant is also partly causing the issue of land grabbing in Africa for both cultivable land as well as waste lands. Other reasons being dearth of cultivable land in the Middle East, desperate measures to support burgeoning populations in developing countries and opportunism.
At least one company thinks so: Valero has just made a big investment in jatropha. We had heard of this plant a few years ago when it was going to the solution to the world's fuel problems followed by a couple of years of silence and unkept promises.
This plant is also partly causing the issue of land grabbing in Africa for both cultivable land as well as waste lands. Other reasons being dearth of cultivable land in the Middle East, desperate measures to support burgeoning populations in developing countries and opportunism.
Wind and Corruption
A recent article from the NY Times explores the growing risk of corruption and fraud in the highly subsidized but lightly regulated wind business:
NY Times | With Wind Energy, Opportunity for Corruption
European Gas : End of the Summer-Winter Cycle ?
An interesting article on Platts.com talks about how there is a perception of a glut in supply in the European gas markets, which is leading to almost no difference between summer and winter gas prices for 2010. The low gas prices (coupled with the low carbon prices) also mean that owners of gas-fired power plants are laughing all the way to the bank.
A large contributor to the glut is the emergence of shale gas as a viable option in the US and ,in the future, in Europe.
Seems a far cry from last year's fears of European dependence on Russian gas and being held hostage by a great angry bear.
For more go to the link (free sign-in required)
A large contributor to the glut is the emergence of shale gas as a viable option in the US and ,in the future, in Europe.
Seems a far cry from last year's fears of European dependence on Russian gas and being held hostage by a great angry bear.
For more go to the link (free sign-in required)
Correlating Recessions and Oil Prices
I was reading another POV on peak oil and found this graph in the discussion which I thought was well presented. You can find the article – which feels like a relatively even handed “peakist” view – here: Time and the Latest CERA Report. The actual article where this chart originated is more specifically geared to the relationship oil price has with recessions and can be found here: Further Evidence of the Influence of Energy on the US Economy. In this latter article, take a look at the comments from some not so moderate “peakists.”
World Energy Outlook released … concerns over it’s legitimacy raised
As we approach the release of the annual World Energy Outlook (released today) report from the IEA there are new reports coming out that suggest that the US Government has been putting pressure on the IEA to inflate the rate of flow through the supply chain from today’s 83m barrels/day to 105m by 2030. This new criticism has not been responded to yet by the IEA but apparently they have said they will respond to it soon.
Article Reference: Key Oil Figures Were Distorted by US Pressure | Guardian
How should we respond to this type of information? My suggestion is that we don’t react yet; this “finding” is really just in the rumour stage and unless the story develops we will likely be at the whim of two large “global storylines” promoted by very well capitalised interest groups or highly passionate people who both believe that the ends justify the means when it comes to mass media manipulation (or at least obfuscation). As a result these stories hit the press relatively frequently and the press – either unwittingly or through influence – promotes the stories as news more than as rumour. This in turn further entrenches most people into the camp that they were already in (a la, “the echo chamber” effect) and on occasion – typically when prices are directly effecting the end customer’s lifestyle – helps to create movement of public opinion in the debate. To be completely clear … I am not suggesting that this most recent rumour is incorrect, simply that there is no way to know at this stage.
Why Smart Meters are not a silver bullet
A dose of real world analysis in the midst of the smart meter euphoria... this article talks about how utilities need to do more than just install smart meters for them to be an effective tool in reducing our energy usage...
Smart Meters: Not So Sharp For Consumers (from forbes.com)
Smart Meters: Not So Sharp For Consumers (from forbes.com)
MPs demand inquiry into great energy 'swindle'
Article: Great Energy Swindle | The Independent
Unfortunately the 'big six' supply companies may have some defence in their argument. It is quite likely that most of them do hedge forward their demand estimates as much as three years in advance; if they didn't their risk would really be too high and this would severely knock their share price. Ok, they will not have hedged their full volume in the first part of 2008, when prices were soaring, however, a large portion of their demand would have been covered at higher prices than we are seeing now.
This leads to many questions with two of the more interesting ones being:
- who did benefit from the higher prices locked in by the big six supply companies?
- When will we see some drop in prices on the back of recent lower wholesale markets?
The answer to the first question may depend on who the supply companies acquired their hedge from, which is probably a mix of their own internal trading company or the commodity trading banks, who by the way are all having massive years! A point to realise is that the integrated utilities do not really care about the electricity price but more about the generation margin (i.e. the difference between power and the fuel price - the so called 'spark spread' or 'dark spread'), which will not have seen such big gains because fuel prices were also high. This being said, we might expect the nuclear generators to be the big winners for once as their fuel price is less impacted by emission prices or other highly volatile energy markets.
The second question is harder and really depends on the hedging strategy in each company but certainly the retail prices ought to start looking lower from now. However, we should not expect the benefit to be a big hit though as the impact will be spread over the price we pay during the next three years or so.
Of course, if prices in the wholesale market start firming again then this benefit will be diluted; with commodity price induced inflation not far around the corner, because the supply/demand situation hasn't improved much of late, do not hold your breath!