Alexander's Commentary
Change of face - change of phase
A Future?
Climate-Change – Change of Climate
Oil-Around 2013
Finally there: The Campbell’s Atlas of Oil & Gas Depletion
New time arising
Ein heisser Herbst? (A hot Autumn?)
Where is this going? – 3
Where is this going? -2
Where is this going?
Is it important?
A Moment of Truth at Passing
The Iran Hoax
The 2012 Adventure
Solstice Greetings
Taking on the future
A new beginning
Twist and Turn
Fly-by-wire
Shale-gas: just a gas?
Little miracles, big wonders
Unconventional gas
Media-power
To Peak or not to Peak, is that the question?
Going on ...
Time for change
Economy; What Economy?
Media Noise Windfall Profit
The Winds of Change
Signs of the future?
Reality and Hope
Best Wishes
What goes around, comes around
A throughout, integrated view
Signs of change?
P.P.P. versus Need
Working for climate-change?
Good signs
Contradicting signals
All over again? The difference between perception and reality.
The paradigm, the mind-set and reality
Two minds
Positive inclination
Different values?
The long view
Leaping to the future
Contango
New signs of hope?
A message of hope?
Some good news anywhere?
A project gone awry?
Traces of light
Driving the markets II
Driving the markets
Meeting reality
Silence for the storm?
The times are changing
Refinery-runs
The Theatre
Some Questions, no answers
Ocean carbon sinks and returns
The good news, the bad and the ugly
A President speaks the truth!
Green masks
Saving us with or from bio-fuels?
The good news
Driving the oil-price?
A new dilemma?
Kenya: a new oil-frontier?
Forecasting a trend?
Some early signs for 2008
2007; A year to remember
The good news
A bit of a shock II
Fraud alert - bogus job ads
A bit of a shock
A simple but far-reaching idea
Hype, Realism, Convergence
Energy-security?
A touch of globality
Climate change and changing the climate
Refineries, Biofuels and internal demand
Figures, figures & figures
Pipelines, Biofuels & Reserves
Expectation, projections, contradictions.
Ponder
A box of Pandora?
Changing systems
A dynamical environment
Projections and reality
Changing reality
A different reality II
A different reality
PPP: Prices, poverty and politics
A whirling 2007
The year of shifting balances
One world, two systems?
Oil and development?
The year 2065?
Mixed signals II
Mixed signals
Trust
Awakening
A War on hold?
No Comment
Changing balances
Truth or Deception?
A fresh overview
Bigger picture first
National Interests vs. Shareholders Value
Fear??
'The Dialogue'
Consumption
Do we actually need to worry?
 

One world, two systems?

2006-12-08


In this issue, covering again quite well the global developments of the international energy-community at several levels, there is one overriding issue that has greater consequences for the energy-industry the coming decades, and that is the issue of how energy is being traded.

In the last decades, large parts of the global energy trade have taken place on the principles of the so-called “free-market”, based on the prices and ways of trading of NYMEX & Co, providing a great flexibility of choice for the consumer (and producer) in where they buy (or sell) quantities of oil (and increasingly also gas) from (or to) whom. The system has worked quite well for quite some years. but is ever more been hampered by an excess in “freedom” that expresses itself in the increasing role of speculators, ever more derivatives, and therefore increasing non-transparency, and suspected influence-taking of governments and other third parties.

Since a few years, we see a rising usage of more bi-lateral price-setting, contracts made directly between the producing- and the consuming country and their governments or leaders. And although the price-setting is often indirectly related to the free-market, the great advantage of the bi-lateral system is a greater security and reliability, and much less volatility.

With the current changes in the political systems in quite some places in the world and a greater influence-taking of governments in the development and exploitation of resources, we can also see a change of balance in the system that is being used and can see a movement of price-setting that starts to have more bi-lateral elements in it, rather than letting the price of the resources be determined by the current quite “concentrated” free market.

All this is fine as long as both parties agree on the system that is being used and are able and willing to adhere to it. When however, there is no agreement on what system to use and both parties want to superimpose their system upon the other, friction occurs and sparks are flying and flames erupting, with all the subsequent verbal flaring that can be brought to bear to try to influence the matter, as we can see since some time in Europe in its dealing with Russia.

We need to realise that the times have changed and are changing ever faster and that a system that has worked well for decades within a fractious market may be loosing its attractiveness because of the “side-effects” that have developed over time and that the “free market”, as we still think it is, is not free at all because of the concentration of resources that has taken place over the years.
We can see that the “government” of the free market, not dissimilar to the more government-related bi-lateral system, is in the hands of just a few parties, albeit that the principles from which this is being “governed” is very different.

So in a changing market, we may expect that verbal sparks will be flying with some intensity for some time, by the different parties or even from good-meaning “friends”, but that an upgrade of both systems is needed to adapt to the reality of mutual interdependence and, in the long term, a decreasing availability.

Stay neutral if you can.

Alexander


Comments are always welcome at alexander@gas-oil-power.com


 

Alexander's Commentary

Change of face - change of phase

In the period of July 20 till August 3, 2015, Alexander will be out of the office and the site will not or only irreg

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