Friday, 30 January 2009

Stimulate – Eminem (2002)

The House passed its version of the massive economic stimulus package Wednesday with some energy-specific items in it, such as:
  • $32 billion to upgrade the national energy transmission and distribution system using "smart grid" technology that better manages power flow, allows for demand response and incorporates renewable power sources better.
  • $16 billion to help improve energy efficiency of public housing.
  • $6 billion to weatherize lower-income homes.
  • $80 billion to $100 billion loan guarantee program for renewable energy, a three year extension of the Production Tax Credit (PTC) for such sources.
Here's the full bill as it now stands courtesy of The Houston Chronicle.

What else should Congress have considered as far as energy items are concerned? Or are these the right ones to focus on?

Photo: The Houston Chronicle.

True – Spandau Ballet (1983)

Okay, so the following is music to my ears. It’s a tune that is receiving considerable play across several publications and portals. This particular one is courtesy of
Invest in Training
In a down market, you will be competing against the best and the brightest. It's imperative to have cutting edge knowledge and experience to take the lead. Play it smart and invest in ongoing training even though it may seem counterintuitive to be spending money during a bad economy. You'll find the return to be well worth the investment. Don't hesitate to inform your clients or stakeholders of any up to date information you may have learned. They will be impressed that you are taking the initiative.
Need I say more?

Tuesday, 27 January 2009

It Won't Change - Greater Victory Temple Choir (1992)

The following is courtesy of Janet Lawrence, our in-house Product Developer based in Oxford:

In August last year, in the midst of rising fuel prices, British Gas offered us the opportunity for a fixed-price gas contract for our home gas supply. My husband and I decided to not take them up on it. A "price cap" might have gotten us interested, but not a fixed price. A price cap would set a ceiling on what we would pay for our natural gas supply but would enable us to take advantage of lower prices should the market drop. That would have been worth considering, depending upon the details of the cap. But BG didn't offer that. They were simply offering to lock in the same price for natural gas, month in and month out, until the end of September 2011.

Yesterday there was a news report that British Gas had announced they will be lowering gas prices by 10%. That's great news, of course, even if wholesale gas prices have dropped more than 10%. At least it's a start.

But that alone is not the reason for this post.

One of the people interviewed by the BBC for the price-cut story was a retired man somewhere in Britain. Unlike us, he had chosen to go for the fixed-price contract last year. And he was upset that the 10% price cut wasn't going to apply to him. He said something like, "I'm so disappointed that my fixed rate hasn't changed."

As much sympathy as I have for a man who is probably living on a fixed income, I would say this to him: What is it about the term "fixed price" that you don't understand? That's the problem with a fixed price contract. It's great if prices rise, but it's not so great if prices fall. And as I occasionally had to tell my trading bosses, very few of us are clairvoyant about future oil and gas prices!

That's what risk management is all about. And we can all see examples of managing risk all the time in our day-to-day life. This one struck me as a very timely example.

Monday, 26 January 2009

Take Me to the Mardi Gras – Bob James (1975)

Petrobras, the national oil company of Brazil, announced on Friday that it plans to spend more than $174 million over the next five years, primarily on deep-water oil and gas exploration. This follows the discovery of vast deposits of oil under more than 4,000 meters of water, rock and salt holding an estimated 8 to 12 billion barrels of oil with other such reserves yet to be "unearthed" nearby.

I represented The Oxford Princeton Programme at Rio Oil & Gas last September. It's fair to say that the mood was buoyant, if not festive, among delegates and exhibitors. After all, projections have the new drilling producing 219,000 barrels a day by 2013, 582,000 barrels a day by 2015, and 1.82 million barrels a day by 2020. And don’t forget natural gas extraction predicted to rise from 7 million cubic meteres a day in 2013 to 40 million a day by 2020.

Talk about an extended Fat Tuesday celebration.

For the full story, click here.

Tuesday, 20 January 2009

Changes – David Bowie (1972)

This past week I was named North American Sales Director in addition to my role as Global Marketing Director here at The Oxford Princeton Programme. I am both honored and humbled by the confidence placed on me to positively affect the business and service our clients in both regards.

I, along with all the teams I am a part of, are committed to you and your employees gaining the acumen and know-how to weather volatility in today's marketplace and maintain a competitive edge in the long-run.

If you have already attended training with us, thank you for your continuing support. If I or any of our account executives can assist in identifying and sorting out your training needs, please do not hesitate to contact us.

We realize that these are not ordinary times. But we are also confident today's circumstances do not dictate tomorrow's progress. We invite you to harness the energy of training with us today and unleash your potential.

Jobert E. Abueva

Friday, 16 January 2009

Tough Times Don’t Last – Bad English (1989)

The title of the article linked below says it all: even during an economic downturn, training is still worth the investment. Many clients already understand this as evidenced in their ongoing commitment to ensure their employees are in tiptop shape, especially in these trying economic times which will eventually turn.

Is your company one of them?

See: Top Firms Still Train... Even in Tough Times
By Jacqueline Durett

Wednesday, 14 January 2009

What a Price to Pay – Michael Damian (1991)

Last Sunday's edition of 60 Minutes took on the question head on whether the volatility in the price of oil the world markets have faced this past year is caused by an "invasion of speculators" who are holding the paper in order to make money and not the actual industry participants who deal with the supply and demand fundamentals when trading the commodity.

See for yourself and draw your own conclusion.

Tuesday, 13 January 2009

The Heat Is On – Glen Frey (1984)

Both Russia and Ukraine finally signed a deal yesterday, again, to resume gas supplies into Europe. But is this the end of the dispute (at least until winter is over)?

Read on...

Friday, 9 January 2009

Expecting to Fly – Neil Young (1968)

There has been increased interest and activity surrounding alternative aviation fuels. The most recent to make headlines is Continental Airlines which this week will have tested a fuel made from algae and a tropical shrub known as jatropha, and in a twin-engine jet no less. It's all in an effort to not rely solely on oil should costs cause headaches as they have in recently. There's the environmental PR game to be played as well.

Other airlines are in test mode as well including Air New Zealand which flew a Boeing 747 last week with an engine running on 50% biofuel mix and Japan Airlines which will repeat the test shortly. I remember the fanfare surrounding Virgin Atlantic's flight last year.

Read further as to why this trend is accelerating. It looks like every conceivable biofuel is fair game to get tomorrow's jets off the ground.

Would you fly on a jet that is run purely on biofuels?

Wednesday, 7 January 2009

Running the Risk – Foreigner (1994)

VaR or Value-at-Risk took center stage in last Sunday's edition of The New York Times Magazine in a cover story entitled "Risk Mismanagement" by Joe Nocera. The subtitle summarizes the debate: What Led to the Financial Meltdown: Mathematical Models Used to Evaluate Wall Street Traders? Or Bankers Who Misread or Ignored them?

If anything, it's a fascinating account of how the concept came about and became a "gold standard" as far as risk-models are concerned. Yes, it has it does have its proponents and detractors.

After reading the article, let me know where you fall on this debate.

Tuesday, 6 January 2009

Bits and Pieces – Joan Jett and the Blackhearts (1981)

A few weeks away from the office and so much to catch up on from my previous postings:
  1. Light sweet crude was on a bit of a rebound closing at $44.50 a barrel on December 31st for February delivery. All in all, oil fell 54% in 2008, the biggest drop since futures trading began over 25 years ago. The winner of The Oxford Princeton Pipeline’s annual challenge is Adrian Wey of Migrol AG who came closest with his guess of $38.50. Others seemed even more pessimistic. Adrian won a free web-based course.

  2. Steven Chu, director of the Lawrence Berkeley National Lab and 1997 Nobel Laureate in Physics for his work in laser cooling of atoms, has been nominated to be the next Secretary of Energy in the Obama administration. Many in the scientific and alternative energy community view this choice as a huge plus in sorting out funding in physics and a lot of other R&D work not to mention the U.S.’s energy policy.

  3. Ghana has a new president. John Atta-Mills, of the National Democratic Congress, beat out his opponent, Nana Akufo-Addo of the New Patriotic Party by a narrow margin of 50.23% to 49.77% or yes, a ridiculously close spread of 0.46%! Mr. Atta-Mills promises an inclusive style of government. How this translates into Ghana’s newly discovered oil fortunes, it is too soon to tell.
And now for the energy news stories early into 2009 that has my attention. Tensions in Gaza aside, what about Moscow’s decision to shut off gas supplies to the Ukraine over a billing dispute while relying on pipelines that cross the country to get to the likes of Poland, Bulgaria, the Czech Republic and Romania?

London's Financial Times reported that Russian gas deliveries to Poland were down 11 percent over the weekend, and others are experiencing the same.

Russia has accused the Ukrainians of stealing gas supplies destined for Europe as the two sides remain far apart on how much Ukraine should pay for Russian gas. The Financial Times noted that Russia's state-owned gas company, Gazprom, now plans to take the matter to the international arbitration court, although this may do little for the situation in the short term.

The pricing dispute is unlikely to ease immediately. The New York Times reported Monday that Russia is now seeking a price of $418 for 1,000 cubic meters, up from a previous offer of $250. The Times also noted that the shortages in Eastern Europe were reaching 30 percent, reminiscent of the previous Russia/Ukraine gas dispute in 2006.

What happens when common folk start to feel the effects of this dispute in the dead of winter?

Jobert E. Abueva
Global Marketing Director