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Notes at the Margin Index
Trader Page. This page from the weekly Notes at the Margin
report contains a graph and table with information on the total
investments of passive traders in the Dow Jones-AIG commodity index
and the S&P Goldman Sachs Commodity index, as well as what
percentage of that investment has gone into oil. The page will be
updated weekly after 4 p.m. EST. |
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Made in the USA:
The Causes of High Oil Prices. Opinion piece by Dr. Verleger
that summarizes the major factors behind the current high oil
prices. |
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PKVerleger LLC
12/11/2007 Senate Testimony. Dr. Verleger's testimony before
the Subcommittee on Energy of the Committee on Energy and Natural
Resources and the Permanent Subcommittee on Investigations of the
Committee on Homeland Security regarding the role of speculation in
recent record crude oil prices. |
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"The
Coming Triple-Digit Oil Prices." This paper continues
Dr. Verleger's discussion of the conditions and forces that will
likely drive oil prices beyond $100 per barrel. |
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"CFTC Data on Commitments of Traders:
Statistics on Commitments of Index Funds." Notes at the Margin
Supplement to January 8 Issue, January 9, 2007. |
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"The
U.S. Housing Slowdown: Implications for Energy Prices."
The Petroleum Economics Monthly, February 2007. |
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"Oil to Triple Digits?:
A May 2007 Special Paper" In the next five to
ten years, crude oil prices will likely exceed triple digits, pushed
there primarily by supply and production capacity constraints. This
paper outlines the conditions and forces that could drive oil
beyond the $100-per-barrel mark in the near future. |
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"Impacts
of Passive Commodity Investors on Energy Markets and Energy
Prices" (Comments on Energy Markets, May 16,
2007). PKVerleger LLC is pleased to announce initiating its new
occasional report titled Comments on Energy Markets. The
first issue, provided for download here, captures remarks Dr.
Verleger presented at the May 2007 Energy Risk conference
in Houston. Please note that this document is in the public domain
and freely available for distribution/citation with proper
attribution. |
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"How Wall Street Controls Oil" (The International Economy,
Winter 2007) – Dr. Verleger examines how control over oil markets,
once the province of the major integrated oil companies and then
OPEC, may now be shifting into the hands of Wall Street investment
banks. |
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"Hundred Dollar Oil, Five Percent Inflation, and the Coming
Recession" (The International Economy, Winter 2006) – In
a follow-on paper to "Why Oil Could Go to $60," Dr. Verleger
discusses why the Federal Reserve's ability to maintain a stable
price environment is "in trouble" due to constraints in the
energy sector. |
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OPEC's One-Way Option: Investors and the Price of Oil –
Presentation, University of Texas at Houston, February 18, 2005. |
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“Why Oil
Could Go to $60” (The International Economy, Fall 2004) –
As the world teeters on the precipice of another crisis, it’s time
for a contingency plan. The rise in cash and forward crude oil
prices has been inexorable since the “end” of formal hostilities in
Iraq in May 2003. Leading indicators of investor expectations for
oil prices see crude reaching $55 per barrel by 2010. Examining the
current situation in this article for
International Economy,
author Philip K. Verleger sees a parallel between today’s oil market
and the one observed in the late 1960s that could foreshadow an even
harsher situation. Under certain conditions, crude prices might rise
to $60 by mid-2005 and $80 by 2010. It’s time, he says, to take
short and long-term steps to moderate price increases. |
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"Energy:
The Gathering Storm (Abstract)" The
world seems to teeter once again on the precipice of another crisis.
Prices have increased by as much as 50 percent and could rise by
even larger amounts. The higher prices will have serious economic
impacts. As in 1973, the world apparently faces a bleak period.
However, the tools are available to moderate the crisis. By acting
swiftly and by obtaining the co-operation of oil-exporting
countries, governments can take steps that may avoid — or at least
moderate —the coming crisis. In this paper, Dr. Verleger examines
the current oil market situation, expectations for the future, and
what needs to happen to head off the "gathering storm."
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"US
Energy Policy: In Conflict with the War on Terrorism"
Efforts to stop the flow of cash to al Qaeda and
other global terrorist organizations have failed. Today, these
organizations obtain funds from a number of sources, one of which is
tied to oil prices. In particular, there is general agreement that
terrorists receive funds from Saudi Arabia. One means by which
funding to the terrorists can be curtailed is to reduce global oil
consumption and depress oil prices. Unfortunately, current US energy
policy is in direct conflict with such an objective. US energy
policy supports terrorism, not the war on terrorism.
In this paper, Dr. Verleger outlines the extreme
contrast between an energy policy that would support the war on
terrorism and the policy followed by the United States government.
Dr. Verleger presented "US Energy Policy: In
Conflict with the War on Terrorism" at the 55th Annual Program on
Oil and Gas Law sponsored by the Institute for Energy Law of the
Center for American and International Law, Houston, February 19,
2004. To view or download this paper, click
the icon to the left or the title link above. |
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The Petroleum
Economics Monthly provides detailed examinations of important
issues that affect the profitability of producers, refiners, and
consumers of petroleum. Now in its twenty-second year of publication, this
report has gained a reputation for anticipating structural changes that
have affected the industry. Readers of the report have regularly been
able to take strategic action before their competitors, thereby
increasing their profitability.
In 2006, The Petroleum Economics
Monthly will continue its coverage and analysis of salient
political and economic events and trends, concentrating as always on
the potential impact on oil markets.
To view or download the cover page,
table of contents, and report summary of the most recent issue of The Petroleum
Economics Monthly, click the icon to the left.
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Notes at the
Margin is a weekly e-mail report distributed to clients of
PKVerleger LLC on Monday mornings. The report summarizes recent changes
in the world and national economy relevant to the energy industry. The
report also offers suggestions about how these changes may affect the
oil market in the coming weeks.
In 2006, Notes at the Margin will continue to analyze weekly developments in relevant
physical, financial, political, and/or regulatory events, focusing on
their implications for petroleum and petroleum product markets.
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In a presentation entitled "Breaking Away:
Reducing the Middle East's Stranglehold on Western Economies and
Diplomacy" made to the Tokyo Conference of the Harvard-Japan
Project on Energy and the Environment, Dr.Verleger spoke on the need to
neutralize the market power of OPEC by establishing an energy free
trade area, or "Energy Common Market." View the summary of this
presentation by clicking on the icon to the left or the title link
above. To obtain a .pdf copy of this presentation, please contact Dr. Verleger
directly. |
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In "Competition
in the Petroleum Industry: The Situation in 2001" (July 2001),
Philip K. Verleger suggests that the Federal Trade Commission’s
application of a “one size fits all” theory of competition has been a
principal source of the recent increases in petroleum product prices
and price volatility. Specifically, he proposes that the Commission has
focused too much attention on retail marketing and too little on the
costs of entry into and continued operation of refining.
To view a summary of this excerpt from
the July 2001 Petroleum Economics Monthly, click the link above
or the icon to the left. The full text can be obtained by subscribing
to PEM or by purchasing a standalone version. If you are
interested in either of these options, please contact Dr.
Verleger.
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In "Electricity: Dimensions
of a Very Big Western Problem" (May 2001), author Philip K.
Verleger analyzes the developing disaster on the US West Coast and its
potential effect on US and world oil markets.
The current water shortage in the West
threatens to cut normal electric generation there by as much as
10 percent over the next year and boost world demand for petroleum
and natural gas by the equivalent of 120 million barrels per day.
The effect of this drought is further magnified by the utter chaos in
California’s electric sector.
The situation in the West may become even
worse if the rest of the United States experiences a balmy summer.
Warmer-than-normal weather would boost electricity consumption across
the country and create additional demand for hydrocarbons to generate
the required power. Initially, use of natural gas would increase across
the nation.
However, the effect of the Northwest
drought, the collapse of California’s poorly structured deregulation
program, and warm weather in the East will ultimately fall on petroleum
markets. Demands for distillate fuel oil and, to a lesser extent,
residual fuel oil will receive an unexpected boost.
These demands will occur as refiners
attempt to meet demand in a tightly balanced gasoline market and as
OPEC tries to keep inventory levels tight. The consequence could well
be very high and volatile oil and natural gas prices for the rest of
2001.
To view or download this paper, click the
link above or the icon to the left.
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BP/Amoco Senate
Testimony provides the full text of the testimony on the proposed
merger between British Petroleum and Amoco by Dr. Philip K. Verleger,
Jr. before the Senate Antitrust Subcommittee on September 22,1998.
To view or download this document, click
the icon to the left.
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The Petroleum
Economics Monthly and Notes at the
Margin mention returns to storage
frequently. Returns to storage provide a mechanism for measuring the
financial return earned by renting a commodity. This excerpt from the
August 2000 Petroleum Economics Monthly explains returns to
storage and provides a basis for linking this concept to other, more
traditional measures of supply and demand.
To view or download this document, click
the icon to the left.
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Unbranded gasoline marketers
are an endangered species. In this presentation, titled "Changing Competitive
Environment for Gasoline Marketing," Dr. Verleger lays out the
forces that are squeezing unbranded marketers, describes the economic
situation of independent marketers and refiners, and suggests several
possible profit strategies for unbranded marketers.
To view or download this document, click
the icon to the left.
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