Two scenarios for Europe: “Europe confronted with high energy prices” or “Europe after oil peaking”

A significant change in trends regarding energy prices (in particular oil) has taken place in 2003 at the beginning of the Iraq War. It has revealed a very strong tension between oil prices on the one hand and the relationship between global oil supply and demand on the other. The strong growth rates of emerging economies up to 2008 have generated a very sharp increase in oil prices. The temporary economic recession of 2008-2009 has resulted in turn into a significant decrease of oil prices, down to a level which remained, however, twice as high as that of early 2003. With the economy recovering from the recession, it is highly probable that energy prices will continue to increase and that Europe will be confronted with high energy prices in the coming decades. Against this general background, two scenarios have been elaborated which differ mainly by the time of occurrence of oil peaking.¹ The differences between the scenario hypotheses are therefore differences of context in relation to exogenous factors. Policies are also considered in the scenarios, but they are not at the forefront and their impact is considered as limited in relation to that of exogenous factors.The first scenario “Europe in a context of high energy price” assumes that the process of oil peaking will not take place before 2030, but that oil price increase will nevertheless be sustained and substantial until then. Numerous adjustments will have to be made in the economy and their territorial impacts will be significant (less polycentricity, more compact cities, decline of the importance of road and air transport). The second scenario “Europe after oil production peaking” assumes that oil production will peak around the mid-2010s (followed by gas production peaking around 2025), despite significant investments to increase production. In a context of steadily growing oil and gas demand, Europe will be confronted with serious economic difficulties. The territorial impacts will be different from those suggested by the first scenario, with stronger pressure put on rural areas and a loss of attractiveness of large cities related to increasing unemployment and social tensions. In both scenarios, the countries of central and eastern Europe will be more severely hit by the new energy context.The scenarios were elaborated in 2005 and slightly reviewed in 2009 in order to take account of the impacts of the economic recession in Europe and of the growing concerns about climate change.     

Government revenue from monopoly supply of currency and deposits

This paper analyses the revenue-maximising problem for a government with a monopoly over the entire money industry, i.e., over the supply of bank deposits as well as currency in circulation. In this case, the government determines both the inflation rate and the nominal rate of interest on deposits. Provided currency and deposits are not perfect substitutes, a positive nominal deposit rate is warranted. Illustrative estimates for Turkey show that the revenue- maximising deposit rate there would be 16$\text{1}\text{2}$ percent and the inflation rate 35 percentage points above the deposit rate, i.e., 51$\text{1}\text{2}$ percent.     

我国石油行业需求影响因素动态计量分析

石油加工及炼焦业、化学原料及化学制品制造业这两个下游行业带给石油行业正向的冲击力度较大,而交通运输设备制造业、化学纤维制造业带给石油行业正向的冲击力度比较小;化学原料及化学制品制造业对石油行业的贡献率最大且逐渐递增;石油加工及炼焦业对石油行业的贡献率也比较大,并逐渐趋于平稳;化学纤维制造业对石油行业的贡献率比较小;交通运输设备制造业对石油行业的贡献率最小。因此,应根据各下游产业的产品需求变化情况制定产业政策和产业规划,调整石油行业的产业结构。     

University of Texas Roundtable on Financing and Managing Energy Investments in a Low‐Price Environment

During the past 18 months, the U.S. oil industry has seen oil prices plunge from well over $100 a barrel to under $30. In a session that was part of a recent Private Equity Conference at the University of Texas in Austin, the CEO of a small independent producer and a representative of a large global oil and gas company discussed the challenges of financing and operating energy companies in today's low‐price environment with the director of energy research at a brokerage firm, the senior partner responsible for the natural resource investments of a well‐known private equity firm, and the head of the oil and gas restructuring practice of a national law firm. The panelists appeared to reach a consensus on at least the following three arguments:

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The characteristics of takeover targets q and other measures

This study attempts to assess differences in the financial characteristics of target and non-target firms using logit analysis and a case-control methodology in which control groups are matched by size or industry. The results indicate that unregulated non-financial target firms are characterized by low $\text{q}$ ratios (market/replacement values) and to a lesser extent high current financial liquidity. Measures of financial leverage were not found to be significant.     

Valuation of general contingent claims: Existence,uniqueness, and comparisons of solutions

The Black-Scholes equation for the price u(x,t) of a call option for a single share of common stock with dividend policy d(x,t) is $\text{1}\text{2}\text{σ}{}^2\text{x}{}^2\text{u}{}_{\mathrm{xx}}\text{+(rx?d(x,t))u}{}_{\mathrm{x}}\text{?ru?u}{}_{\mathrm{t}}\text{=0, 0<x, 0<t<T}$, with boundary conditions u(x,0)=max(0,x?E), 0≤x, u(0,t)=0, 0≤t≤T.The coefficients are unbounded and the equation is not uniformly parabolic. We prove an existence (and recall a uniqueness) theorem for a class of equations with boundary conditions that includes the Black-Scholes equation. These may be used to show that an American option must, or will not, sell for the same price as a European option.     

Explicit solutions to some single-period investment problems for risky log-stable stocks

Numerical approximations are presented for the expected utility of wealth over a single time period for a small investor who proportions her or his available capital between a risk-free asset and a risky stock. The stock price is assumed to be a log-stable random variable. The utility functional is logarithmic or isoeleastic ($\text{y}{}^{\mathrm{a}}\text{q}$, q < 0). Analytic results are presented for special choices of model parameters, and for large and small time periods.     

Eurasian energy prospects and politics : Need for a longer-term western strategy

The Eurasian world around the Caspian Sea is likely to become an important oil and natural gas producer. This region is a gateway to three regions that are of great strategic importance to the West: to the east lies China and the rest of Asia; to the south lies Iran, Afghanistan, and the Islamic world; to the west and north lies Russia, Turkey and Europe. This is a region much larger than Western Europe. Future developments in Eurasia will therefore affect fundamentally not only the security of Western energy supplies, but also the traditional geopolitical equation in that part of the globe. The West needs to address current problems there as well as to pursue a proactive policy of conflict prevention. The European Union already imports half of its primary energy requirements, which will increase to 75% by the year 2020. Mutually rewarding energy cooperation offers the best means for integrating this region into the world family of market democracies. Turkey, a reassuringly Western ally, stands well positioned geographically, politically and economically to act as an energy ‘bridge’ between Eurasia and the West.     

A Simple Implicit Measure of the Effective Bid-Ask Spread in an Efficient Market

In an efficient market, the fundamental value of a security fluctuates randomly. However, trading costs induce negative serial dependence in successive observed market price changes. In fact, given market efficiency, the effective bid-ask spread can be measured by $\text{Spread}=2\sqrt{?\text{cov}}$ where “cov” is the first-order serial covariance of price changes. This implicit measure of the bid-ask spread is derived formally and is shown empirically to be closely related to firm size.     

国际原油价格对我国新能源行业股票价格的波动溢出效应研究

在大气污染日益严峻的情况下,新能源行业受政府大力支持和投资者青睐。新能源与原油一定程度上互为替代品,理论上国际原油价格必然对我国新能源行业股票价格有显著的波动溢出效应,但有些学者却持反对态度,认为我国股票市场对外还没有完全开放,新能源行业发展又很不成熟,所以该溢出效应很难显著。文章运用VAR- Asymmetric- BEKK模型进行比较研究得出：在未去除我国整体股市行情因素时,国际原油价格波动对我国新能源行业股票价格波动溢出效应不显著;而在去除我国整体股行情因素时,国际原油价格波动对我国新能源行业股票价格波动溢出效应在1%显著性水平下显著。表明存在从国际原油价格向我国新能源行业股票价格的波动溢出效应,只是该溢出效应被我国股市总体行情掩盖了。     

Scenarios on European energy security: Outcomes of natural gas strategy in 2020

This paper adopts a futuristic methodology and analyzes the role of natural gas in European energy security in order to transform economic and policy uncertainties into meaningful scenarios. It implements “trend analysis” to forecast the volume of gas needed until 2020 by elaborating the estimates of the EU Commission and “scenario building” to come up with alternative futures forging different regional implications. The economic analysis stems from four scenarios as introduced by the EU Commission: (1) baseline scenario with average oil price of 61$/bbl; (2) baseline scenario with average oil price of 100$/bbl; (3) New Energy Policy scenario with average oil price of 61$/bbl; (4) New Energy Policy scenario with average oil price of 100$/bbl. The policy analysis is derived from the options, restraints, priorities and strategies of the concerned actors which include the EU Commission, selected EU members, suppliers and transit countries. The analysis on actors results in four policy scenarios: (1) Russia first; (2) Russia everywhere; (3) security first; (4) each for itself. The matrix, which excludes the possibility of unprecedented developments such as a drastic increase in European shale gas production or continuing global recession, clusters 16 contingencies. The paper, within this context, gives an idea on how alternative policy options of European energy security may lead to different futures based on oil prices, environmental commitments and strategic initiatives of the concerned actors.     

A note on relative efficiency and risk aversion

Stochastic dominance rules have recently been suggested as criteria for efficient choice under uncertainty. However, the aspect of relative efficiency has been neglected, i.e., given any specific utility function u₀, find the conditions imposed on F and G such that $\text{E}{}_{\mathrm{F}}\text{u≧E}{}_{\mathrm{G}}\text{u}$ for all u?U (u₀), where U(u₀)={u| ? u′/u′ ≥ ? u″₀/u′₀}. This note suggests a necessary and sufficient condition for relative efficiency in the case that F and G cross other only once. Some applications are discussed.     

The European pulp and paper industry in transition to a bio-economy: A Delphi study

The current challenge facing the European pulp and paper industry is how to materialize the transformation to a bio-economy, as well as to realize the necessary new green innovations. The risks, costs and constraints of doing business will increase, thereby further intensifying competition, but at the same time new business opportunities will open up. This study adopts a three-round dissensus-based Delphi approach in order to explore our key research question of how the pulp and paper industry may change strategically, and what is the potential for value creation in the year 2030. According to our expert panel, the main drivers of competitiveness in 2030 will include energy and material efficiency, sustainability, as well as new innovations in products to serve customer needs better. According to the projected 2030 scenario, the pulp and paper industry will produce more diversified products, focus on higher value-added, and aim at consumer segments with higher environmental awareness. On average, 40 percent of the turnover will according to the panel come from genuinely new products. Strategic cross-sectorial partnerships will have a key role in making this big leap, while simultaneously acknowledging the changing needs of sustainability-conscious customers and other stakeholders.     

东北老工业基地产业结构调整与主导产业选择实证研究

通过对东北老工业基地产业结构现状及其存在的问题、产业结构调整的依据以及主导产业选择的方向、基准与具体选择等方面的研究与实证分析,证明了在WTO背景下,石油和天然气开采、化工原料及化学制品制造业和交通运输设备制造业等应作为东北老工业基地优先选择发展的主导产业。     

Transport energy futures: Exploring the geopolitical dimension

The future of road transport, being currently reliant on carbon-based liquid fuels, is largely unclear. Some advocate the necessity of single renewable energy paradigm, but its realization is potentially fraught with difficulty owing to technological challenges, existing sunk costs, and path dependencies associated with existing and emerging options. It could also result in disadvantageous outcomes to emerging economies. Another school of thought proposes that future road transport, even within single nations, will require multiple energy types, mainly because a single source will be insufficient to meet projected needs. A multiple paradigm has the potential to be expensive because several infrastructures have to be implemented simultaneously. This paper aims to assess both concepts by considering the largely neglected dimensions of resource location and regional geophysical attributes, in addition to national technical expertise, industry capacity and modal factors. Case studies from both the developed world (the European Union and Australia) and the developing world (sub-Saharan Africa and China) will assess the possibility of implementing a single transport energy paradigm versus a more pluralistic regime. The results will help to inform policy making and enable greater foresight with regard to making long-term transport infrastructure investment decisions.     

Risk transmission from the energy markets to the carbon market: Evidence from the recursive window approach

The carbon market is an emerging trading system in the financial services sector, with its global market value increasing from $150 billion in 2010 to $851 billion in 2021. In this study, we examined the volatility transmission from the energy markets (i.e., crude oil, coal, natural gas, and biofuel) to the carbon market in Europe. Our sample period ranged from March 25, 2008, to July 17, 2020, and covered phases of different market conditions. We employed an asymmetric and unrestricted version of the bivariate GARCH-in-mean model, assuming flexible distributions within the recursive window framework. Our empirical findings indicate that (1) carbon market returns are negatively and significantly influenced by crude oil and coal market uncertainties, (2) carbon market volatility is significantly affected by crude oil and coal market volatilities, and (3) the biofuel market does not have a significant relationship with the carbon market, probably because the biofuel market is still young and immature. The results of our study could aid carbon market participants in better understanding the information and risk spillover mechanisms from the energy market to the carbon market and provide them with a basis to formulate policies and make decisions on risk management and portfolio optimization.     

Integration of Financial Services

Abstract

Integration financial services is a term with many meanings. Definitions might include:

• ownership of different segments of financial services,

• the distribution of products of one segment by another, and

• a consumer-centric strategy driven to satisfy the needs of the customer regardless of organizational structures.

For the purposes of my paper, I will define it as the erasing of boundaries leading to consumers receiving value propositions that are not restricted by traditional industry segment barriers.     

Unintended consequences of the increased asset threshold for FDICIA internal controls: Evidence from U.S. private banks

We examine the unintended consequences of the 2005 increase from $500 million to $1 billion in the asset threshold for the Federal Deposit Insurance Corporation Improvement Act (FDICIA) internal control reporting requirements. We focus on a test sample of banks that increased their total assets from between $100 million and $500 million prior to the change in regulation to between $500 million and $1 billion within two years following the change. These “affected” banks are no longer subject to the internal control requirements but would have been had the regulation not been changed. We hypothesize that these affected banks are likely to make riskier loans, which will increase the likelihood of failure during the crisis period. We find evidence consistent with this hypothesis. Affected banks have higher likelihood of failure during the crisis period than banks from two different control samples. We also find that auditor reputation (i.e., whether the bank is audited by a Big 4 auditor or an industry specialist auditor) has a moderating effect on the likelihood of failure for these affected banks.     

University of Texas Roundtable on The Role of Private Equity in the Financing and Restructuring of Oil and Gas Companies

In this second of two University of Texas roundtables, four highly successful veterans of the U.S. energy industry, with considerable experience running both public and private companies, discuss recent developments in this rapidly evolving industry. Among the most remarkable—and a major focus of this discussion—is the dramatic expansion of the output and productivity of the Permian Basin of West Texas, and the role of private equity in accomplishing it. Although the Permian has been a major source of oil and gas since 1920, the combination of massive horizontal drilling and hydraulic fracturing has contributed to a tripling of production volumes from about 800,000 barrels per day to 2.5 million during the past ten years. In fact, the productivity gains are said to be so great that, even with the huge run‐up in the cost of acquiring acreage (to as high as $40,000 per acre), today's producers are projecting annual operating returns of 20% even if oil prices fail to rise above their current level of about $50 a barrel. What's more, there appears to have been a fairly clear division of labor between private and public companies in this recent development of the Permian. With most of the high‐priced acreage now being acquired by larger public companies, the primary role of private equity has been to identify and make good on opportunities to increase the productivity and value of smaller operations that can then be sold to public companies—companies that have the size and access to capital to benefit from the economies of scale produced by combining them with their other operations. Thanks to their earlier position in the value chain, investments by private equity groups have generally not only produced higher payoffs, on average, but involved larger operating and financial risks. And this difference in risk profile is reflected in a notable difference in hedging practices between public and private equity‐controlled companies. This difference was summed up as follows by a private equity partner who has also run several public oil and gas companies: To a much greater extent in private equity than in public companies, we think of our projects and companies as delivering value that is largely independent of changes in oil prices. Hedging is our way of saying we don't want to take oil price risk if we don't have to. We do not count on price increases to make our required returns. The returns come from operating the company successfully without the help of commodity prices.