The Allocator's View: Energy Investing
In recent years institutional investors have dominated the flow of funds into commodity-related investments. Its easy to see why: During their super-cycle of the 2000s, commodities especially oil were an endless glass of return. Pension funds, especially, placed big bets on oil and gas real assets, goosing up overall return for a decade and propelling what became the giant albeit highly leveraged shale industry in the U.S.
Then, in 2015, gravity hit.
Memo to Trump: How to talk with Russia about oil
Energy has long been used as a tool of U.S. foreign policy. But it's true in other countries as well, most notably Russia, where President Donald Trump is pondering another possible "reset" in relations. With the U.S. relationship with Russia once again high on the White House agenda amid Russian overtures and intensive attention to the ins and outs of Russian hacking, it's worth taking a closer look at these past roles the U.S. energy industry has played in efforts to pursue warmer ties with Russia. Trump would be wise to heed this history.
A Price on Carbon May Be Coming Soon
The most important reason is that big market players and the investors who back them are changing their minds on the issue -- and they're prepared to use their muscle to try to make a carbon price happen. Companies and investors, after all, thrive on transparency and predictability, and they fear that the current state of carbon regulations is too convoluted, making planning difficult and exposing them to risk. They see a price on the emission of carbon as a way to resolve that uncertainty and get some clarity once and for all.
Since the First Industrial Revolution, oil and gas have played a pivotal role in economic transformation and mobility.
But now, with the prospects that major economies like the United States, China and European nations will try to shift away from oil, producers are coming to realize that their oil reserves under the ground -- sometimes referred to as "black gold" -- could become less valuable in the future than they are today. Of the four scenarios for the future of the industry ... three of them envisage this type of world.
What happens when demand for oil peaks?
Trends and Changes in Global Energy Markets. Amy Myers Jaffe speaks to the 2016 CFA Annual Conference (video)
How will investors view oil and gas funds on a forward-looking basis if oil prices start to recover? What would global peak oil demand look like, and what impact would it have on energy companies' performance and strategy? Do investors need to worry about "stranded" coal, oil, and gas reserves as part of their risk management?
The Future of Energy. 2016 CFA Institute Annual Conference
Amy Myers Jaffe walks through the breadth of innovation in traditional energy sources and so-called alternative energy technologies. Energy breakthroughs have lowered the costs of alternatives and provide a viable channel for capital investment and government policy to flow. Jaffe expects a wave of climate change related policies to push economies into alternatives going forward.
Why the World's Appetite for Oil Will Peak Soon
"Conventional wisdom about steadily rising demand is wrong ...The world's economy is experiencing transform- ational changes that will dramatically alter patterns of energy use over the next 20 years. Exponential gains in industrial productivity, software-assisted logistics, urbanization, political turmoil in key regions of the developing world, and large bets on renewable energy are among the factors combining to slow the previous breakneck growth for oil." "
If Peak Oil Arrives, Investors Will Need to Get Smarter
"In 2014 oil was considered one of the safest bets around -- regulation and technology might crimp demand in the industrialised west but as more of the developing world's poor moved into the middle-class, oil demand would remain strong. Fast forward to 2016, and many analysts, including those in strategic planning departments of large oil companies, are starting to warm to the idea of peak oil demand globally, not just in the OECD."
Energy Market Globalization: Geopolitical Interactions and
"All the indictors are these long structural downward lines, which give you the option to export material. The United States has this incredibly unique opportunity with these exports ... If all this material is going to leave the U.S. at a spot market-related price, then the price leadership of transparent market prices becomes double pressure on OPEC."
The Baker Institute • Rice University