The Energy World is Flat: Opportunities from the End of Peak Oil
A stronger, more informed approach to the energy markets
The Energy World Is Flat provides a forward-looking analysis of the energy markets and addresses the implications of their rapid transformation. Written by acknowledged expert Daniel Lacalle, who is actively engaged with energy portfolios in the financial space, this book is grounded in experience with the world of high-stakes finance, and relays a realist's perspective of the current and future state of the energy markets. Readers will be brought up to date on the latest developments in the area, and learn the strategies that allow investors to profit from these developments. An examination of the markets' history draws parallels between past and current shifts, and a discussion of technological advancements helps readers understand the issues driving these changes.
Energy has always been at the forefront of the economic agenda, being both the key to and a driver for development and growth. Its centrality to the world of finance makes it imperative for investors and analysts to understand the energy markets, irrespective of where on the wide range of energy spectrum observers they fall. The Energy World Is Flat is a guide to the past, present, and future of these crucial markets, and the strategies that make them profitable. These include:
- Understanding the state of the energy markets, including key developments and changes
- Discovering the ten pillars of a successful energy investment strategy
- Reviewing the history of the energy markets to put recent changes into perspective
- Learning which technologies are driving the changes, and how it will affect investors
The recent energy market changes were both unexpected and so fundamental in nature that they represent a true shift in the energy macro- and microeconomic landscape. Investors and analysts seeking a stronger approach to these markets need the expert guidance provided by The Energy World Is Flat.
no scarcity or shortage of hydrocarbon resources on planet Earth. But, as one of my bosses once told me, “perception is reality” and consumer governments around the world, often inﬂuenced by geopolitics and other considerations, have created a perception of energy reserves scarcity. Trim: 152 x 229 mm c05.indd 12/18/2014 Page 55 FLATTENER #2 – THE ENERGY RESERVES AND RESOURCES GLUT 55 The world is also addicted to hydrocarbons, and ever since the industrial revolution, economic growth has
again, the United States has enjoyed the beneﬁts of cheaper and abundant natural gas through lower bills for consumers and industrial users. In the United States, the “energy disinﬂation” is a strong stimulus for the economy, and has been a key contributor to the recovery and outperformance of the US economy. Japan, in stark contrast to the United States, following Fukushima, suffered a “double whammy” via lower supplies of nuclear power generation and higher LNG prices, both deteriorating the
problem is not regulation in itself. The problem is when regulation is mixed up with political goals, with short-term Trim: 152 x 229 mm c12.indd 12/19/2014 Page 161 FLATTENER #9 – REGULATION AND GOVERNMENT INTERVENTION 161 horizons, with the view to suppress market forces, and with very poorly designed policies implemented. As former US Secretary of State Larry Summers famously said, “Policies that aim to thwart market forces rarely work, and usually fall victim to the law of unintended
industries. I. Parrilla, Diego, 1973– II. Title. HD9502.A2L3325 2015 333.79–dc23 2014044969 Cover image: ©shutterstock.com/Madlen Cover design: Wiley Set in 11/15pt in ITC Garamond Std by Laserwords Private Limited, Chennai, India Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK Trim: 152 x 229 mm ffirs.indd 12/18/2014 Page v Dedication From Daniel Lacalle To all my colleagues in the energy sector and decades of hard work looking for a better world, and in particular to
capitalization among European utilities was worse than the European bank shares lost in the same period. These losses have important implications, and have impacted traditional core investors such as pension funds, who no longer view the sector as steady, reliable, and inﬂation-resistant that would help them balance their long-term liabilities. Once upon a time utilities were viewed as the US Treasuries of the equity markets, but that’s no longer the case. It turns out that renewables are not the