Energy and the Economy in 2014: January Issue of

Front Title Page IMAGEEach issue of contains: a Main Essay, a Model Portfolio, a Data Brief, and a link to a Downloadable Podcast. Gregor Macdonald, Editor.

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The theme of this month’s publication, Energy and the Economy in 2014, is that oil will finally reprice a second time, a full decade after its first repricing. This process will begin quietly later in the year. We also take a look a the prospects for repricings in coal and natural gas, and the boost to the economy that will start to flow from the extraordinary growth in renewables:

No single fact better illustrates the energy predicament the global economy continues to face, than the strangely immovable price of oil, which has just recorded a third straight year at a stable price just below $100 a barrel. Who would have guessed that a tumultuous, historic energy transition would quiet down, eventually, into a groove of such seeming stability. But is this stability, or constraint? As we peer into the uncertainty of the year ahead, and the pricing changes which lay in store for each of the primary energy sources, from natural gas, to coal, to oil, we must take account of this question. How exactly to describe this constraint? Easy. The global economy remains on a leash, and at best, is able to formulate a kind of sideways-moving advance, in which net, new economic output is mostly offset by a rearranging of the existing pieces of our current system. At, however, we endeavor to remain alert, as this temporary equilibrium will surely come to an end. What follows, therefore, is a review and outlook of energy and the economy in the year ahead. In short, 2014 will proceed rather quietly until later this year, when the very big changes coming in 2015 are finally signaled.

There are also changes to the Model Portfolio, which began April 1, 2013:

Taken together, pure fossil fuel investments in the model portfolio now amount to 45% of its composition….Powergrid exposure accounts for another 25%. This suggests further investment should direct itself mainly to renewable energy, and in particular solar.

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“ January 2014” by Gregor Macdonald – Editor on Ganxy