Planck Foundation



The price volatility is a huge problem in the energy market. Only back to back operating trading parties will survive, the others will win a lot upwards, but will be hit downwards. The downwards price from $ 147 per barrel (July 2008) to even under $ 90 a barrel (September 2008). This 35% price drop has whipped out many high risks taking trading parties in just only 2 months. For many investors (and many investment banks) this was the final blow. Price volatility is also the reason that energy investments are difficult when only calculated on (recent) historical prices. Price volatility has a lot to do with the short term acceleration/slowdown (perspective) of the global economy. For long term energy investments, the availability of the fuel and its price fixation are crucial. This is the reason why renewable energy certainly will win of carbon and nuclear energy. The cost price of renewable is in design very fixed will the wind/sun doesn't send daily fuel bills ever. Renewable energy is non volatile in cost price (as long if the interest rate is fixed).

Author: Gijs Graafland

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