My #1 trend to watch for 2011 was increased oil price volatility driven by upheaval in the developing world. However, I certainly hadn’t foreseen the melt-down in Egypt. I thought it might be economic or social turmoil in the over-heating economies of China or Brazil that would impact oil prices (they still may of course).
But Egypt, while not a large oil producer, has strategic supply resources, the Suez Canal and Sumed pipeline, which, if disrupted, can greatly impact global oil flow and by consequence, oil prices.
Politically, the outcome in Egypt is far from evident and potentially far reaching throughout the major oil producing countries in the Middle East. For oil marketers and consumers, this is not simple “headline news”, this is a major geopolitical and economic event to monitor.
Changing gears, I was very encouraged by President Obama’s State of the Union address concerning energy policy. In this blog, I have consistently advocated increased governmental investment in research and development of energy sources that, at production scale, have lower cost and similar benefit as conventional hydrocarbon-based fuels. As opposed to the current governmental practices of subsidies or tariffs for wind, solar and conventional biofuels, or growth-retarding tax increases in the form of carbon cap and trade, Obama’s energy plans appears to be shifting towards good old American R&D…huzzah!
I’d love to hear your thoughts concerning the start of the new year.
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