Alfred Hitchcock Presents………Energy

Some would say that energyland™ is incomparable to the genius that is film director and producer Alfred Hitchcock, but I say poppycock! For energyland™ contains as many twists and turns on a daily basis as a Hitchcock thriller. So without any more suspense, let us join the dots betwixt the two.

Psycho – UK natural gas prices have been crazy in the last month given storage has been basically drained empty as the UK has experienced the coldest March since 1962 (um, 51 years).  But no contract has been more volatile than within-day prices, which closed as high as 100p/th due to an outage on a pipeline halting supply from continental Europe

To Catch a Thief – This one is low-hanging fruit; $7 billion is lost per year due to oil theft in Nigeria

Sabotage – And we stay with Nigeria, as the militant group MEND announced yesterday it would restart its campaign of sabotage against the petroleum industry after an amnesty which has been upheld since 2009

Number 13 – It is not only the 13th full week of the year, but it is also unfinished – much like Hitchcock’s first film from 1922. Unfinished also describes the natural gas storage withdrawal season – it should have ended weeks ago, but for a lingering end to winter

Vertigo – Although US natural gas prices have ripped higher from mid-February lows, they have suddenly been hit by a bout of vertigo upon reaching the $4 mark, a height not achieved since late 2011. Given how coal becomes relatively more attractive at this level – as does bringing more production back online – prices may well further suffer from this affliction going forward

Rich and Strange – My mind immediately jumped to Donald Trump, the man with a tenuous link to energy as he has just lost his battle against a wind farm not far from his golf resort in Scotland, as he claimed it would spoil the view

Frenzy - This is the story of RINs. RIN = Renewable Identification Number. Ethanol’s current use in gasoline has just reached 10%, which means it is hitting the ‘blend wall’; i.e., no more ethanol can be safely blended into gasoline. Every time a refiner produces a gallon of ethanol, they receive a RIN number, and these RINs can be traded.

The Renewable Fuels Standard mandates the US needs to use an increasing volume of ethanol, with the onus on refiners to do this. But due to the blend wall being reached, this is not possible. This has left refiners having to buy RINs instead of blending ethanol. Given a limited supply of RINs, prices have been suddenly whipped up into a frenzy:

Although prices have eased from their highs, unless we see fuel demand increasing (ergo, increasing the need for ethanol), the cost to refiners to buy RINs will likely filter through to gas prices

Strangers On a Train – Given rail is one of the more energy efficient forms of transport (says, err, Amtrak), the potential of this high-speed rail network across the US presents both a more energy efficient and relaxing way to travel

Downhill – Retail gasoline prices are now heading downhill – and gaining traction – having likely reached their seasonal peak

Foreign Correspondent – Given the sanctions on Iran by the US, it is unable to use a foreign correspondent bank to receive payments for its oil in US dollars. Hence Iran is now accepting payments for its oil in all manner of currencies…such as rupees from India

This movie marathon ends here, but feel free to add any Hitchcock movies you can link back to energy… thanks for playing!