The Vega Factor: Oil Volatility and the Next Global Crisis

by Kent Moors

Overview

How oil volatility is affecting the global political scene, and where the oil market is heading

The world is rapidly moving towards an oil environment defined by volatility. The Vega Factor: Oil Volatility and the Next Global Crisis takes an in-depth look at the most important topics in the industry, including strategic risk, why traditional pricing mechanisms will no longer govern the market, and how the current government approaches have only worsened an already bad situation.

• Details the industry's players, including companies, traders, and governments
• Describes the priorities that will need to be revised, and the policies needed to achieve stability
• Explains how today's oil market is fundamentally different from the pre-crisis market

Oil prices affect everyone. The Vega Factor explains the new international oil environment of increasing consolidation and decreasing competition, and reveals how consumers and investors can navigate price volatility and new government policies.

Product Details

ISBN-13:	9780470602089
Publisher:	Wiley
Publication date:	05/31/2011
Pages:	448
Product dimensions:	6.20(w) x 9.00(h) x 1.60(d)

About the Author

KENT MOORS is Professor in the Department of Political Science and the Graduate Center for Social and Public Policy at Duquesne University, where he also directs the Energy Policy Research Group. An internationally recognized expert in oil and gas policy/finance and risk assessment, Kent is also President of the oil and gas consulting firm ASIDA, Inc., advising companies, financial institutions, law firms, and governments worldwide. He authors the Oil and Energy Investor, a twice-weekly advisory, the monthly Energy Advantage, and the investment alert service The Energy Inner Circle, and is a frequent contributor to Money Morning and contributing editor to the two leading post-Soviet oil and gas publications—Russian Petroleum Investor and Caspian Investor. Through an agreement with DeMatteo Monness, he provides specialized advisories to a broad range of Wall Street analysts, as well as investment, hedge fund, and capital and asset managers.

Read an Excerpt

Click to read or download

Table of Contents

Preface ix

Chapter 1 The Meaning of Oil Vega 1

Chapter 2 How Oil Volatility Relates to Strategic Risk 15

Chapter 3 Determining Oil Prices 37

Chapter 4 Dollars, Credit, Financial Crises, . . . and the Oil Connection 57

Chapter 5 Oil Companies and the Upstream/ Downstream Tradeoff 101

Chapter 6 How Government Action Increases Volatility 141

Chapter 7 Is There a Response? 179

Appendix A World Proved Oil Reserves (Billion Barrels) 197

Appendix B Exxon CARM per Gallon (January 3, 2000 to December 31, 2007) 209

Appendix C Exxon ARM per Gallon (January 3, 2000 to December 31, 2007) 221

Appendix D Shell CARM per Gallon (January 3, 2000 to December 31, 2007) 241

Appendix E Shell ARM per Gallon (January 3, 2000 to December 31, 2007) 253

Appendix F BP CARM per Gallon (January 3, 2000 to December 31, 2007) 273

Appendix G BP ARM per Gallon (January 3, 2000 to December 31, 2007) 285

Notes 305

About the Author 421

Index 423

Editorial Reviews

On the basis of his expertise as an oil and gas consultant, Moors, a professor at Duquesne University, warns that we may be on the verge of another financial crisis even more serious than the real estate bubble. He explains that we are in the midst of a new round of speculation based on the manipulation of energy markets. According to Moors, the cause of this is not related to events in the Middle East or a putative shortage in oil. He shows that the price of oil and oil products in commodity markets has little to do with oil as a commodity. Given oil's massive function in the world economy, the result of this structural flaw could potentially be much more devastating than that of the sub-prime mortgage crisis. Oil futures contracts have become financial assets in their own right, and no longer serve the primary function as a means for oil producers dealing with short term fluctuations in demand. Moor offers original research on the relationship between pricing of crude oil and gasoline products in the US. He is deeply concerned that governments will not be able to solve the problems he believes are looming, but nevertheless purposes solutions of his own.
(c) Copyright PWxyz, LLC. All rights reserved.

Publishers Weekly