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16 May 2015

Press review 16-05-2015 - Worrying advances

The Brent index closed another week of gains just an hair shy of 67 $/b. Since the beginning of the year the benchmark that prices more than half the petroleum traded internationally has climbed almost 40%. This price is however far from meaning solace to the much battered petroleum industry; the negative outlooks succeed one after the other and every other day the media reports on some troubled company. Some cry "peak oil", likely precipitously. As in the past, the of fate of petroleum will possibly be determined by geo-political events.

Syria has been persistently in the news with the Sunni advancing fast toward the capital. Some media claim the Sunni have received advanced military technology that is decimating the cavalry divisions of Bashar al-Assad's regime. The fall of Damascus appears now a matter of time. The question then is: where will the Sunni turn to next? Will they pursue the western front towards Lebanon, or will they focus on the eastern front in Iraq? Irrespective of the outcome, the Sunni are already regaining the initiative in Iraq, once again attesting to their superior logistics and warfare practice.

09 May 2015

Press review 09-05-2015 - The Tesla hype

This week was marked by the hype created around the stationary battery put on sale by Tesla. The news were out last week, but since there was nothing outstanding about the figures presented, it was not part of the last review. However, the web soon burst with excitement, even with anti-renewables outlets lending a great deal of attention to it.

There is nothing special about the Tesla technology, lagging the competition in various aspects, but the hype is a case study in itself. Almost at the same time Toshiba firmed one more contract with its own stationary Lithium ion technology, that is supposed to last 6 to 7 times longer that Tesla's. To that the media remained widely silent, while on Tesla they went wild. Forbes started by claiming a manufacturing cost of 0.02 $/kWh, meaning it would be essentially free. It then switched discourse to claim that figure was relative to operational costs - but even in that case it still remains ridiculously low.

Once again the media appears little interested in informing the public, it ignores relevant developments while promoting dubious products. As long as the hype lasts there is money to be made in stock markets; but at some point reality settles in. This same dynamics was in great measure responsible for the shale sub-prime bubble.

06 May 2015

Units of Volume

Some weeks ago I was involved in a long e-mail discussion over units of with American colleagues. Arguments went back and forth, but we could not agree on what Tf3 meant.

I finally came to the conclusion that that Tf3 has a different meaning in the US. The unit prefixes used there, even if graphically similar, are not interpreted the same way as the prefixes in the International System of Units (ISU). These differences are likely unknown to most outside the US (like they were to me) and are possibly the source of many errors.

There is also a linguistic twist to this matter that is important to note.

02 May 2015

Press review 02-05-2015 - Still under the waterline

The Brent index is still holding well to its rally, closing the week near 66 $/b. The WTI index, used to price petroleum extracted in the US, is in contrast under 56 $/b, a difference of almost 20%. The price rally is not really happening across the Atlantic, leaving the American industry without relief for now.

Geo-political developments continue to dominate the economic outlook for the years to come, with competing powers continuously challenging the dominant role NATO acquired after the fall of the USSR. There are many points of tension around the globe, which could not possibly be entirely covered in this review. But by focusing on energy flows, it is clear other actors now have a say in the plot of this show.

29 April 2015

Footing the bill in Lybia

Muammar Gaddafi visited Europe for the last time in August of 2010, received in Rome with all the honours of a chief-of-state. At the time he requested five thousand million euros from the European Union to help the fight against illegal immigration. His words were peremptory: "Tomorrow Europe might no longer be European, and even black, as there are millions who want to come in".

One year later Gaddafi would be summarily executed at the hands of an Islamic militia.

25 April 2015

Press review 25-04-2015 - Contrasting trends

This was a busy week with multiple developments of interest in energy markets and international politics. Libya is back to front pages, and again for the wrong reasons. However, both the media and politicians remain reluctant in admitting the role of the 2011 European/NATO bombings on the current refugee crisis. The way Italy is being left on its own to deal with the crisis is also quite revealing of the impasse the European Union is in today.

The Brent index extended the current rally, closing the week above 65 $/b, the highest price in over four months. Nevertheless, this price is yet far from bringing solace to the western petroleum industry, that proceeds its haemorrhage of capital and jobs. One of the reasons is the gentle and mooted return of Iran to the international petroleum market, bringing on stream reserves of high EROEI with which international companies can no longer compete.

18 April 2015

Press review 18-04-2015 - Inversion?

It is not uncommon in commodities markets for an unanimous view to signal a turning point. With the resource optimist media reviewing their outlooks for infinite growth, something was clearly about to change. It just took a few days from the moment the Forbes group declared the "shale boom" dead to a new run up in petroleum prices. Wednesday alone the Brent index climbed nearly 7%, closing the week well above 60 $/b, the highest price since early December.

It will certainly not be this price yet to invert the contraction of the petroleum industry and halt the wave of job losses. But this week trading shows that in first place the price bottom of early January is likely done and secondly that volatility has not gone away.

Soon the media will start guessing where will the petroleum price settle. It will be a pointless discussion, the drivers behind the volatility that brought the price here have not changed.