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
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

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