Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

New Arab Spring Could Breed Chaos in the Energy Markets

Politics / Crude Oil Jun 04, 2013 - 02:55 PM GMT

By: Money_Morning

Politics

Dr. Kent Moors writes: Investment opportunities in the energy markets always bounce between questions of available supply and prospects for demand.

These days many commentators in the U.S. are viewing excess domestic shale gas and tight oil as a factor in restraining energy prices. Meanwhile, their colleagues in Western Europe forecast continuing economic malaise, translating into a similar result.


Both put forward the position that there is a surplus of oil and gas in a weak global economy, thereby reducing concerns over either supply or price.

I have questioned those premises before here in Money Morning. And I agree that there's no crisis situation emerging any time soon. The prices may not remain as low as some believe, but supply isn't going to be an issue in North America or in the European Union.

But the same can't be said about other parts of the world. And it's this wave of unrest that may have repercussions across the entire energy sector.

Arab Spring Sows Fields of Discontent

Energy has become a central concern in the return of what some have called "Arab Spring: The Sequel."

Little was actually resolved the first time around. Governments were displaced, a tyrant here and there separated from his rule, and popular movements morphed into the next battlegrounds. But where all of this will end up is anybody's guess.

Actually, each uprising has sprung from separate roots, has had different local targets, and is undergoing transformations into distinct power vacuums.

It's this last consideration that may be the most significant for policymakers in places like Washington and Brussels. Popular uprisings make for great headlines but terrible direct routes to stable political outcomes.

And that's without any other problems to cloud our understanding of where events are moving and what the outcomes are likely to be.

As we experience the first phases in another round of unrest in these emerging economies, another challenge presents itself that only heightens the stakes ... and reduces the time available for a peaceful resolution - growing energy distribution issues in these economies.

Part Deux: Picture Cloudy, with Conflict

Some locations are the same as in the initial period of unrest - the one that began in late 2010-early 2011 with the toppling of a despot in Tunisia.

North Africa remains a hotbed. Qaddafi may have departed the scene in Libya and Mubarak in Egypt, but the situation on the ground is deteriorating. Both have energy issues as major components.

In Libya, the issue is who controls the flow of oil and, to a lesser extent, natural gas. The country remains one of the last major sources of highly desired light sweet crude in the world.

The other primary producer is Nigeria. Unfortunately, that West African nation is moving again into civil division, with Al Qaida groups in the north waging a war of terror while the Delta region in the south descends into civil war once again.

In each, control of black gold is serving to divide already weak civil infrastructures.

However, the crisis in Egypt is of quite another variety. There, despite encouraging reserves of natural gas (especially in the Nile offshore region), the country is experiencing massive power shortages. Rolling brownouts are intensifying. Officials are now openly talking about a network-wide collapse of the national grid.

Add to this the nation's highest court determining yesterday (Sunday) that the latest parliamentary elections were invalid. The decision further paralyzes the functioning of the national government and guarantees the escalation of "street" politics, that is, citizens (and law enforcement) taking to the streets.

The energy crisis is also central to rising tension in other places in the region.

Pakistan, never known for its political stability, has been in a full-blown energy disaster for some time. Unfortunately, this time it's beginning to show signs of bringing the infrastructure down with it.

Attempts to build pipelines for the import of gas from Turkmenistan and Iran have yet to materialize, while plans for liquefied natural gas (LNG) terminals have been similarly stymied. There's now no part of the country with guaranteed power or sufficient fuel upon which to build a reliable industrial base.

The real danger here: the rising inability of the central government in Islamabad to provide for basic energy needs and, thereby, essential services. This is a primary justification for areas never under solid central control anyway to move away from the national government even more.

The lack of functional national energy infrastructure isn't going to result in immediate civil war in Pakistan. But what's fast approaching is in many respects worse.

Regions will effectively become autonomous, with local clan and tribal leaders becoming de facto rulers. Such a "Balkanization" will rapidly increase risk and lower its ability to act or negotiate as nation state.

Pakistan Becomes a Global Security Fulcrum

Pakistan's geographical location - its neighbors are Iran, Afghanistan, India, and China - guarantees that unrest there will trigger cross-border problems. For example, Iran has a collapsing oil and gas sector reeling under Western economic sanctions, and India has a mushrooming energy shortfall.

For its part, China has to provide accelerating amounts of energy for its huge population and manufacturing interests. Thus far, it has moved into other countries by acquiring producing assets or entrance into joint ventures. A power vacuum on the other side of the border, however, could well change Beijing's policy dynamics.

Turkey is the latest to explode. As of the weekend, 67 of the country's 81 provinces have experienced protests, particularly violent in Istanbul, Adana, and the capital Ankara.

The unrest is not sparked by an energy shortage. Yet even here, the energy issue is of central importance. Turkey is quickly becoming both the major regional player (thanks to the rapid decline of both Egypt and Syria) and the central throughput venue for Caspian and Central Asian oil and gas to global markets.

That means paralysis in Turkish politics will translate into energy pricing and supply concerns in short order.

As we watch a new chapter in street politics unfold in an already beleaguered part of the world, the position of energy looms large. And that is likely to impact upon investment prospects even if the main sources of oil in the region remain insulated from their own brands of "Spring."

Bottom line: You need to see the whole picture before you can understand what makes for a good investment. Opportunities are both good and bad. The more accurate information you have, the better you can discern one from the other.

I'll keep you in the loop.

Source :http://moneymorning.com/2013/06/04/new-arab-spring-could-breed-chaos-in-the-energy-markets/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules