Monthly Archives: May 2013

The announcement that the Department of Energy and Climate Change – along with half a dozen other Whitehall ministries – has accepted another reduction in its budget under the latest spending review will be celebrated only by the energy companies and their lobbyists. A weak department has been weakened further with its negotiating capability undermined at a critical moment.

Most of DECC’s £3bn budget goes to meet its statutory obligations – including nuclear decommissioning costs. Those obligations can’t be cut so the burden falls on the “discretionary” areas of policy making which include negotiations around the vexed issue of Electricity Market Reform. Cuts and natural wastage, which leaves a significant number of posts unfilled, mean that the department is now seriously understaffed for these negotiations. There is big money at stake and for the companies no expense on staff and lobbyists is too great. The secretary of state has been supine in accepting the cuts without challenge. 

One part of the financial market which is thriving is the so called activist investment community. Could the international oil and gas sector be their next target?

US majors' performance vs S&P500 


The collapse of the European emissions system over the last few weeks is a serious indicator of the loss of interest in the issue of climate change among the top policy makers, especially in Germany. Unless the market can find a new credibility the whole structure of the European climate agenda looks vulnerable. 

Success always brings its own burdens. The Chinese economy has grown in real terms by around 8 or 9 per cent a year since 1980. Some 800 million people have been lifted out of subsistence. Dozens of new cities have been built. The country is now one of the world’s great economic powers even if it is still not allowed to join the G8. And growth continues. China is the world’s biggest building site.

One of the burdens which has come with economic success is the need to import oil. China has found very little oil, despite extensive exploration efforts – especially in the South China sea. Net imports have therefore risen steadily from zero twenty years ago to 5.6m barrels a day last month. 

The news that Exxon is to build a $10 bn LNG export facility in Texas marks another significant step forward in the story of shale gas and its disruptive impact on the world energy market. Those who want a parallel for the painful process through which so many of the established forces of the industry on one side and the lobby groups on another have struggled to come to terms with the reality of shale gas over the last three years should read John Heilbron’s fascinating book on Galileo