Current events
Tropical Storm Rina, from north of Honduras now, is approaching Mexico. Rina was moving north-northwest at 6 miles per hour with the wind speed 40 mph. It will have a bigger opportunity to turn into a hurricane with a even large wind speed. With the increasing wind speed, many constructions would not be able to stand there completely. As soon as the important energy productions are destroyed, people’s demand will drive the energy product price up.
It is also reported that flood will be created by the “Hurricane” Rina automatically. When wind becomes stronger, cloud which are holding the water will float even faster than they move before. And also it will be easier to rain in some regions when the wind made by Rina become stronger suddenly. Rina would be able to trigger 13 centimeters of rain in many places. Usually, during the normal raining season, the rain will not trigger more than 10 centimeters, so we could easily imagine the situation when Rina holding the storm and flood rushing to the regions in Mexico. It covers many energy industry so that makes the situation even worse. A tropical-storm watch, indicating winds of at least 39 mph are possible. But one of the presidents said Rina won’t be a threat to Gulf of Mexico oil and gas production.
Even though the Rina won’t play a main factor to drive the energy supplying price up, but it will still create an effect. Since the News keeps reporting the destroying power or the influence with the Rina, people will easily to think about doing something for the situation that in case the price goes up. With an economist thinking, price always plays the role when people are deciding whether to purchase the energy like the oil more or less. So, it’s no doubt that demand will go up for a while and the energy supplying price will also give a feedback.
In a word, tragedy sometimes will also create a better market environment for the energy companies.
Reference:
http://www.bloomberg.com/news/2011-10-24/atlantic-storm-rina-forecast-to-strengthen-passing-honduras.html
Interesting article on how nature affects the energy industry. The main point of this blog was mentioned in the last sentence of the article. Natural Disasters can often create a better market for energy companies. With that said, it may be more beneficial to introduce your "bottom line" in the opening of the blog post. When our paper is written, we want to make sure our bottom line (or thesis) is clearly defined, and then proceed to back it up with information. I was slightly confused in your last paragraph because you said Rina won't play a main factor in driving the price of energy supplies. However, at the end of the paragraph you concluded that increased demand will have its own feedback in supply prices. All in all, nice current event. We should look if Hurricane Rina is affecting American companies who operate in the Gulf of Mexico or that general area. I know Chevron drills heavily in the Gulf of Mexico, so this hurricane could be creating/destroying business for them
ReplyDeleteIs it a noticeable observation that wars and natural disasters have presented the United States with the most intense opportunities for economic growth yet also decline? I think an explanation of this double edged sword would be incredibly interesting and a great addition to this post!!
ReplyDeleteI agree with Dan that this concept is very interesting and perplexing for someone speculating the effects that a natural disaster can have on this industry or the particular companies involved in this area of the world. What trends have we seen in the past with regards to this environmental scenario? This could help us to identify factors that effect our industry and how companies seem to come out of them. If we are looking into investment companies this could also be a good topic to research, how has this particular company bounced back with uncontrollable disasters that effect them? Do they have a plan, back up, what security measures are taken to prevent anything happening? The last thing we would want for our investment company would to have something such as the BP spills and crises as seen in Elyse's posts above happen to our company and have the company not be able to respond. BP obviously didn't have a plan for this and it showed.
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