Search on Ifri.org

About Ifri

Frequent searches

Suggestions

Free Europe's Economists

Editorials
|
Date de publication
|
Référence taxonomie collections
Édito Énergie
Image de couverture de la publication
Free Europe's Economists
Corps analyses

By all indications they have been locked up while spin doctors are writing statements for Presidents and Prime Ministers. Not since Venezuela's President Hugo Chavez seized on the idea at the end of the last century have we heard serious contemplation of an oil price band. The last forty years of experience with price volatility in commodities should by now have provided ample proof that negotiated, state-administered price bands are meaningless and confounding for markets.

Set that aside and the two Summiteers have some good thoughts. Collaboration between IEA and OPEC remains a good idea, but it predates creation of IEF and has been consistently robust. Forecasters and economists in both organizations know well the differences in each agency's outlook and their origins. Underlying numbers are drawn from the same sources or sometimes from each other - but it should come as no surprise that a supplier will describe the same elephant differently that a consumer - shared analysis but different conclusions.

Instructing the IEF to carry out a mandate "to arrive at a common long-term view on what price range would be consistent with the fundamentals" is to appear to be action-oriented while putting an impossible task before a group that cannot hope to accomplish it. Governments should turn first to their role in addressing the thorny issues that make oil supply and demand so inelastic, arguably adding more volatility to the market than speculators.

Transparency has been a priority for years and some considerable progress has been made. The Joint Oil Data Initiative, driven initially by IEA and OPEC and now managed by IEF is a good example. But many energy market data are still opaque. Financial market involvement in energy commodity markets needs considerably greater transparency and monitoring, recognizing that non commercial trading in energy commodities is ultimately a good thing. So too are more transparency and oversight.

Where President Sarkozy and Prime Minister Brown can contribute more to market stability and predictability - is by ensuring that their national projections for climate change policy, renewables penetration, efficiency gains and technology deployment are reflected in clear policy decisions and regulatory guidance to the market. Uncertainty in energy commodity markets is aggravated by policy uncertainty combined with political targetry. Why put in capacity if demand for fossil fuels will be dropping sharply? Why build refineries if biofuels are going to fill the gap? Who needs another pipeline if European incremental gas demand to 2020 is flat?

Policy-induced uncertainties aggravate the cyclical nature of energy commodity markets and create opportunities for portfolio managers to add energy to their financial strategies, probably aggravating volatility, but only because the opportunity is there.

For further input to G8 energy reflections click here

Decoration

Available in:

Regions and themes

Thématiques analyses

Share

Decoration
Author(s)
Photo
photowr3_modifie-1.jpg

William C. RAMSAY

Intitulé du poste

Directeur du Centre Energie de l'Ifri de 2008 à 2011, Conseiller de 2012 à 2016

Image principale
Climate & Energy
Center for Energy & Climate
Accroche centre

Ifri's Energy and Climate Center carries out activities and research on the geopolitical and geoeconomic issues of energy transitions such as energy security, competitiveness, control of value chains, and acceptability. Specialized in the study of European energy/climate policies as well as energy markets in Europe and around the world, its work also focuses on the energy and climate strategies of major powers such as the United States, China or India. It offers recognized expertise, enriched by international collaborations and events, particularly in Paris and Brussels.

Image principale

Europe’s Black Mass Evasion: From Black Box to Strategic Recycling

Date de publication
02 December 2024
Accroche

EV batteries recycling is a building block for boosting the European Union (EU)’s strategic autonomy in the field of critical raw minerals (CRM) value chains. Yet, recent evolutions in the European EV value chain, marked by cancellations or postponements of projects, are raising the alarm on the prospects of the battery recycling industry in Europe.

Image de couverture de la publication
Couverture Politique étrangère 4-2024

The New Geopolitics of Energy

Date de publication
03 December 2024
Accroche

Following the dramatic floods in Valencia, and as COP29 opens in Baku, climate change is forcing us to closely reexamine the pace—and the stumbling blocks—of the energy transition.

Image principale

Can carbon markets make a breakthrough at COP29?

Date de publication
30 October 2024
Accroche

Voluntary carbon markets (VCMs) have a strong potential, notably to help bridge the climate finance gap, especially for Africa.

Image principale

Taiwan's Energy Supply: The Achilles Heel of National Security

Date de publication
22 October 2024
Accroche

Making Taiwan a “dead island” through “a blockade” and “disruption of energy supplies” leading to an “economic collapse.” This is how Colonel Zhang Chi of the People’s Liberation Army and professor at the National Defense University in Beijing described the objective of the Chinese military exercises in May 2024, following the inauguration of Taiwan’s new president, Lai Ching-te. Similar to the exercises that took place after Nancy Pelosi’s visit to Taipei in August 2022, China designated exercise zones facing Taiwan’s main ports, effectively simulating a military embargo on Taiwan. These maneuvers illustrate Beijing’s growing pressure on the island, which it aims to conquer, and push Taiwan to question its resilience capacity.

Related Subjects

How can this study be cited?

Image de couverture de la publication
Free Europe's Economists
Free Europe's Economists, from Ifri by
Copy