More worrisome is the globe temperature, which sets another record this year. Relate this to the severve draught in Vietnam. Be prepared, learn from the shale phenomenon – don’t be caught by surprise next time.
BNEF chief sees optimistic future for renewables in an age of plenty. Cost are falling due to technical and economics, while energy (electricity specifically) demand will be less than expected.
Nick Butler is not that optimistic for grean energy though. Refering to IEA’s latest report, Nick thinks renewables will not quickly become the major energy source. Coal still dominates, especially in China and India where industrialisation are happier with lower hydrocarbon price. The two vunerable conventional technologies are nuclear and gas-fired power generation, which are both relatively costly. Cost will be pushed down by renewables economics – with near-zero variable cost. But Nick insists that subsidies are still needed for renewables to grow.
The key question is which IOCs will be the first to adapt with such future and succeed. Or the future will belong to small ones in a distributed energy market.
Oil price stablises around 47 for much of Sep 2015 as US production slows (most since Jan 2013), drawing strong support signals from a technical analysis view too. And when the Russia uses flights to hit targets in Syria, market players start to calculate. There are no significant oil facilities in Syria, but the incident remarks a bold move by Russia (and Putin, amid weakening state budget and economy) and implies further instabilities in the region are possible. Such events might push the proxy war between Iran and Saudi Arabia to a real one. There will be so much oil involved then, and so the market reacts.
Price retreats sharply on 12 Oct as data show OPEC production surges again (proving OPEC actions differ from their words). Important to watch will be production from US – whether productivity gain can offset other revenue loss and credit pressure. This will be the lever that swings oil market at the moment. A good summary of US shale oil economics from BP chief economist.
Bloomberg had warned about debts by oil companies, as oil-price collapse since mid 2014 cuts the cash flow, lower ratings, and make new loans difficult.
Now FT raise the issues again, and pushes it further. Ed Morse from Citi says that tightening financial climax for oil companies will shut production down. And this will be the decisive factor, rather than the wants of OPEC (weakened power) or other non-OPEC producers (Russia, or even US producers).
Kick start the blog on energy with Fed’s decision on rate! Because this is much talked about, and might affect oil price significantly in coming months (through the USD, financial markets, and many other channels).
But after that will be more on the oil and gas market, and renewables as the energy sector’s future too.
First, a good guide on Fed’s rate decision.