Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

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