Rise of the Guardians…From the Easter Bunny to Energy

So I wanted to write an Easter-related post and my mind immediately jumped hopped straight to ‘Rise of the Guardians‘  – my most recent encounter of the Easter Bunny (via my kiddos). So from Santa to Sandman and beyond, here is the rise of the guardians…. in energyland™. 

First up, it is difficult to consider a more dominant force in any market – energy or otherwise – than Saudi Arabia in the oil market. Saudi’s status as the lynch-pin of Opec and the balancing item of the global oil market makes it the leader of the guardians: Santa.

And just like in the movies, although we may lose faith in Saudi’s ability as a sackful of challenges are faced – from rising non-Opec supply (hark, US production) to dissent within its ranks (here’s looking at you, Iran – aka villainous Pitch Black) – its status as largest global producer and exporter of oil mean it will ultimately restore calm in the end.

And as and when it needs a little help, it can always turn to some of the other members of its cartel (aka the Yetis and Christmas Elves) to help it out.

Next up is Sandman, the guardian of dreams. For although the gas shale revolution is alive and kicking in the US, it is the stuff dreams are made of in Europe, despite no shortage of resources. The best way to communicate this is in a similar fashion to Sandman – not through words but through images instead:

While we are on the topic of Europe, The Tooth Fairy represents the North Sea, as she is the guardian of memories. Despite rumors and murmurs of new oil finds, it seems that rampant oil production from this once prolific supply source  will remain but a memory.

Onto a guardian who knows no bounds or obligations: Jack Frost, guardian of fun. He represents the US oil shale revolution, as its progress tears up the rule book and defies gravity. We have spoken about the meteoric rise in oil production in North Dakota a number of times before, but this emphatic growth is now being seen at other shale plays such as Eagle Ford in Texas. If prosperity brings fun, then Jack Frost represents this shale play well, for it had a $61 billion impact on the Texas economy last year (h/t Carpe Diem).

Finally, the Easter Bunny himself, and his role as guardian of hope. For the greatest hope we have in energyland™ is that of improving energy efficiency. According to the EIA, the US is still 82% reliant on fossil fuels for its energy needs, a number which will only fall a mere 3% to 79% by 2040.

Greater efficiency and structural changes in the past few decades have helped to reduce energy intensity. So while we wait for technological breakthroughs to bring renewable energy to the fore, greater efficiencies are our best hope of reducing our carbon footprint.

Thanks for playing – Happy Easter!

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About The Author

Matt Smith is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Reuters, and The Oil Daily. Prior to ClipperData, he spent eight years at Schneider Electric as a Commodity Analyst, where he also founded and authored the blog, Energy Burrito. Prior to Schneider, he spent eight years at the Royal Bank of Canada in London as a portfolio manager and financial analyst.