Commodities Class: Electricity
Ever since the Chilean born, Friedman bred "Chicago Boys" came on to the global economic scene in the 1970's the electricity markets have grown in depth and structure.
With Thatcher's UK government privatizations of the electricity supply industry and the U.S's movements in the same direction over the last two decades, the transfer has been complete.
What was once a worldwide state-to-state government monopoly (regardless of economic system) had become a functional market
Topic #6
Electricity (power/energy)
Most here are too young to remember the Enron fiasco in real time, so maybe this take on the Death Star, is something worth revisiting.
The electricity markets are arguably the most complex and certainly the most unpredictable. By simple virtue of them not having been around for long, it is much harder to get a clear picture of where they are going.
With electricity's demand and need being instant, the markets are designed and organized in a completely different way. What makes them fascinating and naturally efficient is the feature of storage, which is not present with something like a precious metal or a ground based resource.
Since electricity is so difficult to store, someone has to watch it 24 hours a day, from both the supply and demand sides of the coin.
Independent System Operators and Regional Transmission Organizations (ISO's and RTO's) were established as a conceivable method of handling the increasing number of transactions which take place in an increasingly competitive environment.
As this field is more prone to disaster than most, risk management plays a huge part and is arguably far more important than actual sales, trading or any of the traditional banking facilities and operations.
Predictions and Rodeos
Though the electricity/power/energy markets are still in a very nascent stage, they also have the most room for growth. How much and in which direction is open to vast speculation...
As always, I want to hear what you guys expect and predict for the oncoming year(s) in this market?
A free note for you Energy Rodeo attendees: study up on Spark Spreads they are a bit over my head quantitatively speaking, but certainly a popular valuation method in the industry.
For those who want to take a trip down memory lane to the last time New York City was actually New York City and why a massive power outage can be a good thing... enjoy
Very interresting post Midas Mulligan Magoo. If anyone has a book about electricity trading i'm interested in. There are very few informations about this even if I live in France and I think that it's not tomorrow that it will become an important matter ^^
this is my fave one..
thesquale... pm me as I have a long list of power books.. I am a power trader
Have to agree with Monty on this one. I'm definitely going to have to look more into this commodity class.
I am on the electricity side also, although I am not a trader. It is probably the most volatile commodity since supply and demand have to stay very synchronized. Electricity must be produced such that it is consumed immediately or else our electronics would not work properly.
People in energy...we love our spark and crack. Hope to see some of you at the Energy Rodeo!
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