Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Trumponomics Stock Market 2018 - The Manchurian President (1/2) - 21st Jul 18
The Death of Japan's Real Estate Dream - 21st Jul 18
SMIGGLE Amazing Mega Shopping Haul, Pencil Cases, Smigglets and Giant Back Packs! - 21st Jul 18
Cayton Bay Beach Caravan Park Holiday - What's it Like? - 21st Jul 18
Gold Stocks Investment Wanes - 20th Jul 18
Diversifying Your Stock Investing Strategies is Smart Investing - 20th Jul 18
Custom Global Stock Market Indexes May Be Sounding Alarms - 20th Jul 18
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

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

© 2005-2018 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