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Saturday, January 23, 2016

WEEKLY ENERGY REVIEW

Earlier this week I reported on the effect of China on the world stock markets.  I ended with an analysis of the Volatility Index (VIX).  There is also a VIX for oil and this indicator has shown significant metastability, not quite as high as December of 2008 when the stock market crashed, but recently up to 66, where 25 represents stability.  However, yesterday petroleum surged from a low of $26 to $32/barrel.


Here are six trends for 2016, and $20/barrel oil is one potential outcome, especially with the  re-entrance of Iran into the equation.

We all know oil will someday run out in the Middle East.  When?  Well, this is surprising (in years at current production):
    • Venezuela      387
    • Canada          178
    • Iraq                163
    • UAE               156
    • Saudi Arabia   81
    • Russia             22
    • China              15
    • USA                10
On the solar front:
  • However, a solar boom has been forecast for Saudi Arabia.  Kuwait has set a target of generating 20% of electricity from renewables.  Only 20%, and no target date?  Egypt is supposedly bullish on solar.
  • RWE AG cancelled nine planned wind farms in England and put on hold 10-12 more, representing $1.4 billion.  Reason?  The UK government ended a subsidy program a year early and will be cutting subsidies to wind technology.  Amber Rudd (right) is Energy Secretary.
  • The world seems to be piling on with regards to China, but 60 Minutes this past Sunday reported on a long festering issue of Sinovel (from China) stealing the wind turbine intellectual property of American Superconductor.
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