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The ultimate guide to energy 2008 was a year of two halves. What will 2009 bring? The collapse in oil prices in the second half of last year was, in its way, as spectacular as the surge that saw prices set record high after record high in the first half. From the dizzy heights of nearly $150 a barrel in mid-2008, prices have slumped by around two-thirds in value. Why did oil prices set out on that crazy, inflationary streak? People have conflicting opinions about that: put yourself in the picture by reading the article starting on page 30 of the 2008 edition of How the Energy Works - just click on the link to the left. It's a little easier to explain why prices then fell: there's nothing like a global recession - and the seemingly relentless cycle of downgrades to GDP that have occurred since the global financial system began to implode - to knock the stuffing out of demand and prick what it turns out was one big bubble.  But wasn't a fall in prices a good thing? Doesn't that mean cheaper energy for everyone? Sure, there are some obvious benefits: lower inflation rates and cheaper gasoline at the pump to name a couple. But oil prices can fall too far: the costs involved in extracting oil and gas are astronomically high - because the technical, manpower and physical challenges are generally so great. So a reasonable oil price is needed to provide the economic justification for pumping hundreds of millions - sometimes billions - of dollars into oil and gas projects. If the oil price falls too far, investment may start to dry up. First to go will be alternative energy schemes, such as wind and solar power; if there's lots of cheap oil sloshing around the marketplace, there isn't much of an economic incentive to branch out into cleaner forms of energy. But while the world economy may be under the cosh now, energy companies know that recovery is just around the corner - which means a resurgence in energy demand and oil prices isn't far off either, which, in turn, will provide greater economic incentives to invest. So despite difficult market circumstances, caused by low oil prices and stubbornly high costs, oil and gas companies know they can't afford to cut back on investment. The technical side of energy development has always been immensely challenging; now the challenges on the planning side have ratcheted up a notch. Those problems apply to politicians too. President Barack Obama has set out a vision for a green revolution in the US: how will he achieve that in practice? And he and other world leaders must decide this year - or very soon after it - on specific measures to tackle climate change. What are the chances of success? 2009 could turn out to be one of the most difficult, yet defining moments in the history of the energy industry. Find out more by reading the 2009 edition of How the Energy Industry Works, which will be published and distributed to Energy Future's network of universities in the summer and posted on this website. Why has this book created such an impact in the academic world and inside large energy companies? Read for yourself by accessing both editions free, from this site. Simply click on the links to the left. Suggest a topic for us to cover in the 2009 edition by contacting the Editor at tnicholls@energy-future.com You can pre-order copies from us as follows: If you are a university or student club, contact us at: alopez@energy-future.com If you are an industry association and would like to pre-order copies for your members, contact us at: caroline.deguitaut@energy-future.com If you are an energy company and are wondering why you are not listed in the Directory of Leading Employers, contact us at: guitaut@energy-future.com |
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