Women in Banking. Now I'm In Trouble ...

Here we go.  More women needed in the City - particularly in the Boardroom and the trading floor.  Because?  Well, a bank with women in charge is less likely to suffer a crisis. 

Christine Lagarde, managing director of the IMF, has suggested that if collapsed bank Lehman Brothers had been Lehman Sisters, the current economic crisis could look quite different. "I have joked that a 'male' culture of reckless financial risk taking was at the heart of the global crisis," she said. "Studies back this up." (DTel)

In other news ... these chaps, the CEO and Chair of the Care Quality Commission apparently had to leave somewhat precipitately last year.  Some sort of crisis on their watch, and a cover-up too ! - or so people say.

No, it's not Jo Brand

Now, back to the banks ...

ND

Shale and the Price of Gas

When push comes to shove, people really don't understand markets very well.  Perusing the increasingly lively meeja coverage of putative shale gas in the UK, we find people who say shale discoveries will bring down the price of gas, and seemingly even more who say it won't - including, remarkably enough, the shale gas lobby itself.  Wishing, I suppose, to be cautious in their claims, some of them say the effect will be minimal. 

At a meeting for concerned residents at a potential fracking site in West Sussex, a Cuadrilla representative was asked to comment on whether shale gas could drive down customers' energy bills. “We've done an analysis and it's a very small…at the most it's a very small percentage…basically insignificant,” said Mark Linder, a public relations executive at Bell Pottinger who is also responsible for Cuadrilla's corporate development.  (Inde)

Some PR he is, eh?  At least he didn't say prices would go up, though we may be sure that in due course someone will - the whole renewables policy is a massive bet on this.  The argument seems to be that under EU trading laws we'll be 'forced' to sell it to the wretched continentals, (read: they'll offer to buy it, and if the price is right we'll sell it !), thus neutralising any tendency to lower UK prices.  (Even Peter Lilley seems to be willing to concede this.)

Let's put some perspective on this.

•  in 1994 a relatively small gas surplus in the UK brought down the price of (wholesale) gas by 60% in 8 months - and it stayed down for 5 years
• it went up again when in 1999 the UK became connected for the first time to the gas networks of the continent, where gas prices were higher - set by oil-indexed gas contracts.  The quantities of gas being exported from the UK that effected this price-shifting arbitrage were relatively small (indeed, on a net year-round basis, extremely small, as UK gas was exported in summer, but there were imports from the continent in winter)
• European gas importers still paying oil-indexed prices (to Gazprom, Sonatrach et al) have been seriously hurt as spot prices have once more fallen, based on another relatively small surplus stemming from the 2009 industrial downturn.  (In consequence they have forced Gazprom to reduce their prices.)
• US gas prices have been absolutely trashed by substantial amounts of shale gas, and have stayed low despite warnings for several years that this can't go on.  Of course, as yet they are only able to export very small amounts of the net North American surplus (the US is still a net importer, from Canada).

So: gas prices like other prices, as any fule kno, are frequently set by marginal effects, and move in the predictable direction.  Surplus => down, just to be clear ...  If there is any economically recoverable shale gas lurking there, its directional impact on price is not in doubt.  

If and when it is produced in fair amounts (say, equivalent to 10-20% of UK demand - a lot less than some predict will flow) it will have the potential to impact on spot-gas prices not only in the UK but in Europe as a whole.

The absolute effect of this will hinge entirely on the detailed supply-demand dynamics of the time. This being a good few years into the future, we have no idea whatever what those will be.  

OK ?

ND

UPDATE:  The Horizon programme on shale 'n fracking was fairly balanced and well done.  It's on again this evening, and here. 

Energy Companies, Large & Small

Well, there's a thing.  Someone else reading C@W diligently.

Energy industry needs fewer, bigger players - MPs told: the best way to generate more competition in the gas and electricity industry is to have fewer, big players - a top consultant claims today.

Actually, retrenchment to a Big 4 is not the answer.  A realistic end-state is a big 10 or so of heterogeneously-profiled, properly capitalised players with none of them allowed to be fully vertically integrated.

My invoice is in the post.

ND

Syria and the new Afghanistan

 

It's it difficult to believe the myopic view of UK politicians. After a quite disastrous foray into Iraq which ended with the UK being chased out of Basra and shia militia's taking over and a soon to be followed similar example in Helmand and Afghanistan.

Years of on the ground work and an initial invasion have yielded no real strategic success. In Iraq there is at least a vestige of democracy and maybe once Kurdistan separates the Country can begin to focus and move forward. It is an improvement on Saddam but with a very high blood price.

In Afghanistan the Taliban look poised to re-take the Country in next few years. The blood and treasure expended will be for nothing.

Now we have Syria, with a terrible civil war stretching into its 3rd years with the Country bitterly divided. Most of the Arab world supports the rebels and with Iran and Hezbollah, as well as Russia on the other side. Qatar and other arab states have provided plenty of arms to the rebels.

Why on earth should the UK get involved? We have not real way to end the war and no appetite for a ground war. Even the air campaign in Libya which seemed so successful has left a bitter country to be ruled by various militia's of one kind or another.

We all bemoan defence cuts, but at a time when our defence spending is falling and our ability to effectively use hard power can be questioned with the Islamic region in the Middle East, why on earth are our ministers and leaders so keen to gets us involved. I have no answer, it is bewildering to me for people who should know better and have expended enough of our soldiers lives in recent times to learn all the answers they need for this question.