what’s been happening on energy markets? · 1.33 1.09 1.05 0.70 0.60 0.70 0.80 0.90 1.00 1.10...

What’s been happening on energy markets?

A. Halff

Centre Cournot

New York October 3, 2017

420 West 118th Street, New York NY, 10027 | @ColumbiaUEnergy | energypolicy.columbia.edu | energypolicy@columbia.edu

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• Narratives come undone as soon as they take hold

• Market unpredictability vs. dumbing down of the storyline

• Impact vs. insight

• L’envers de la médaille

• More simplistic messages

• Once adopted, views become entrenched

• Internet memory

• Caveat: self-fulfilling fallacies

Jokes played by the oil market on its

commentators

2

Last #1 hit of the old regime

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Dueling song sheets

4

Hit #2: The rudderless market

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• New price regime?

• “Death of OPEC”

• Shale as swing producer?

• Price elasticity

• Short cycle

• Untested

• Distributed

• Financially vulnerable

• High volatility

• “Brace yourself”

Hit #3: The return of OPEC

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• Premature obits

• La relève

• Barkindo effect

• New generation

• Master of storytelling

• Heads of state shuttle diplomacy

• Selfies

• Coalition building

• La grande entente

• Missing post-mortem

Hit #4: Lower for longer (again)

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• OPEC’s catch 22

• Shale resilience

• Productivity gains

• Permian miracle

• Endless learning curve

• More when it’s coming from

Limits of shale

8

• Disappointing growth

• Lower guidance

• Cost inflation

• Tight labor

• Congestion

• Sweetspotting

• Finance crunch

Back to square 1?

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Catchy tunes

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Old & new

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1.33

1.09

1.05

0.70

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

2015 2020 2025 2030 2035 2040 2045 2050

2015 = 1

Oil Demand Forecast Range

Max (Statoil Rivalry)

Median Oil

Mean Oil

Min (IEA 450 / Statoil Renewal)

1.43

1.27

1.23

0.94

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

2015 2020 2025 2030 2035 2040 2045 2050

2015 = 1

Energy Demand Forecast Range

Max (IEA Current Policies)

Median Oil

Mean Oil

Min (Statoil Renewal)

Include BP, Exxon, Carbon Tracker (3 scenarios), Statoil (3 scenarios), EIA, IEA (3 scenarios), OPEC

Mile-Wide Ranges

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Hiding in Plain Sight

13

-

5

10

15

20

25

30

1990 2014 F2020 (NPS)

Mto

e

IEA Estimates of Dev. Asia Oil Demand for Power Generation

Source: WEO 2016

China

India

Other Dev. Asia

Non-road transport

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- Irrepressible demand?

- Consumer side - Recycling / Plastic in the ocean

- Consumer behavior

- Supply side - Naphtha vs LPG, Pulp, other Bio…

Petrochemicals

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- Large-scale urbanization forecast in South and Southeast Asia, Sub-Saharan Africa

- ‘Smart Cities’

• Opportunities and Challenges

Urbanization

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Thank you

Antoine Halff Sr. Research Scholar; Director, Global Oil Markets

Program

a.halff@columbia.edu

+1 (212) 853-0116

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