Grupo de Economia da Energia

Posts Tagged ‘price’

What the impacts on the current revolution market of the shale gas?

In natural gas on 25/07/2011 at 00:15

By Edmar de Almeida 

The development of technologies for production of shale gas has been considered a revolution for business and economics of natural gas. Many agents and even the U.S. government believe that unlinking price of natural gas from price of oil in the United States is a structural phenomenon that reflects the new technological and geological context of the natural gas industry. There is a perception that the technological revolution of shale gas will affect permanently not only the U.S. gas industry, but also the global gas trade. Those believing this structural show the following arguments to support this view:

  • The current shale gas resources in the USA are equivalent to 3.5 times the volume of all proved reserves in the USA today. Moreover, the availability of shale gas resources is not restricted to USA. A recent survey conducted by Department of Energy (DOE) has pointed out the existence of large volumes of shale gas resources in 48 sedimentary basins in 32 countries, including Brazil, Argentina, Bolivia, Uruguay and Paraguay.
  • The technological learning process in the last 10 years has reduced dramatically the cost of producing shale gas. The main innovations were: i) reduction of the time for drilling wells, ii) improvement of horizontal drilling techniques, iii) improvement of geological knowledge in production areas, iv) development of hydraulic fracturing technology and standardization of equipment. These innovations have reduced production costs to less than US$ 3 per MMBtu, in the best producing areas. Leia o resto deste post »

Effects of high oil prices: the accumulation of oil revenues in the OPEC countries

In oil on 02/05/2011 at 00:30

By Helder Queiroz*

In the article “The crisis in the Arab world and price of oil we highlighted that the volatility of prices would remain as a consequence of the sources of uncertainty. These are associated with political instability in the Arab countries and the need for restoration of geopolitical relations established between producing and oil importing countries.

At the end of the first quarter of 2011, some of the consequences of the conditions of volatility and high prices in international oil market must be reviewed.

Three high-interdependent aspects should be highlighted and qualified. Leia o resto deste post »

Prices, costs and new regulatory framework for oil

In oil on 25/04/2011 at 00:30

By Thales Viegas

The production sharing agreement, in Brazil, changes significantly the role of costs and prices in oil activity regulation. First, costs have become the decisive factor for determining the surplus oil to be shared. Second, the price of oil may not only be a reference to the monetization of oil for each agent involved, that is, the price which pays the oil purchased by agent. It can also influence the magnitude of the sharing, if the price is a variable in the calculation that defines the percentage of surplus for the government. In some countries, to share profit oil with the government depends upon the price of oil. That is, the higher the price of oil, the greater the government’s portion for the profit oil.

By deduction, the production sharing agreement may fix the involvement of government in production, but also can allow it to alternate according to contract items previously agreed. Given the centrality of price and cost variables, the following analyses attempt to explain the interdependent dynamics of these two items. Leia o resto deste post »

Impacts of the earthquake and the japanese nuclear crisis on the international natural gas market

In LNG, natural gas on 18/04/2011 at 00:20

By Marcelo Colomer & Edmar de Almeida 

One of the few existing consensus among energy experts at the moment is the recognition that the energy crisis, in particular the nuclear crisis in Japan after the great earthquake of March 11, will tend to benefit the international natural gas market. Many experts were in rush to point out a rapid redemption of the natural gas market after nearly three years of depressed prices. In fact, the price of natural gas and oil suffered a sharp drop from the 2008 crisis, remaining at a very low level, even after the recovery of price of oil in 2009. This expected price recovery in the gas market is considered as great relief by sector agents, although a more careful analysis of the current context of the market reveals that recovery may take longer than expected. Leia o resto deste post »

Flex-fuel vehicles: understanding the choice of fuel

In biofuels, ethanol on 21/03/2011 at 00:31

By Luciano Losekann and Gustavo Rabello de Castro(*)

As previous article, models that allow you to choice fuel, gasoline or ethanol, rule cars for sale in Brazil. Flex-fuel vehicles already represent 46% of the Brazilian light vehicle fleet, whose portion should rise continuously.

Thus, most car owners can choose the fuel they use at the time of fueling. Thus, the demand for gasoline and ethanol becomes more volatile. Although other factors influencing consumer choice, such as autonomy and environmental impact, the relative price of fuels is the predominant criterion of choice. Leia o resto deste post »

The crisis in the Arab world and price of oil

In oil on 28/02/2011 at 00:30

By Helder Queiroz

The current political crisis in the Arab world is already causing upheavals in the international oil market. After the worsening crisis in Libya, an OPEC member with production around 1.5 million barrels, the international prices of crude oil have risen significantly in recent days, reaching the level of US$ 108 per barrel for Brent crude.

The degree of uncertainty in the markets and the resulting volatility of prices tend to increase in the coming days, due to unpredictability for the political and economic consequences in Libya, but especially on possible developments in other OPEC countries.

Thus, the greatest fear of the agents operating in that market is about the possibility of disruption of supply. Under these conditions of uncertainty, the oil futures market is more active, multiplying significantly the number of transactions, causing an upward trend. This aspect is not particularly recent. In mid-2008, prices reached the level of US$ 145 and dropped to almost half that value at the end of that year. Leia o resto deste post »

Recent development and trends in pricing in the global LNG market

In LNG, natural gas on 29/11/2010 at 00:52

By Edmar de Almeida

The global Liquefied Natural Gas (LNG) trade has experienced an enormous expansion in the last two decades. This expansion was accompanied by an important evolution in pricing and types of contracts for LNG trade. Traditionally, LNG trade was supported by long-term contracts with a pricing trying to link the price of LNG to the competing fuels (oil or its byproducts). Until now, this sort of trade prevails in the LNG markets in Asia and parts of Europe.

The liberalization of gas markets in North America and some European countries allowed the appearance of new rules on pricing of natural gas. With the gradual increase of gas-gas competition, some short-term and spots markets were developed, allowing the use of new indexes for natural gas trade. Concurrent with the appearance of gas spot markets in North America and Europe, we have witnessed a fast development of the LNG market in the Atlantic Basin. The regasification capacity of the Atlantic Basin is now approaching half of global capacity. United States and United Kingdom, as an example, had stopped importing LNG in the 1980s, and returned to import LNG in 2000.

Leia o resto deste post »