Reuter’s reports remarks of Daniel Yergin made in Singapore:
“Oil prices today do not reflect the world’s supply and demand fundamentals. Instead, prices are reflective of the weak dollar and expectations of a strong economic recovery,” Yergin told reporters on the sidelines of a conference.
Changing value of the dollar aside, isn’t all that Yergin is saying is “it isn’t supply and demand, it is expectations about supply and demand”? And don’t the twin concepts of supply and demand already embed expectations, so isn’t all that Yergin is saying is “it isn’t supply and demand, but really, it is supply and demand”?
Maybe, slightly more charitably, Yergin might be taken as emphasizing that recent oil price movements have been driven by expectations of future supplies and demands rather than simply based on immediate production and consumption plans.
Or maybe what Yergin is saying is, “it isn’t supply and demand fundamentals, so don’t go hiring some cheapy, low-class energy economics consulting firm, instead you need a prize-winning energy consultant who can dress up ordinary supply and demand factors in words worthy of our world-class fees.”
Thinking about wishful thinking (see previous post), I am reminded of a minor error in George Stigler and Claire Friedland’s classic article, “What Can Regulators Regulate? The Case of Electricity.”
As part of their introduction, they write:
And if wishes were horses, one would buy stock in a harness factory.
I believe they have misapplied the unstated underlying comparative statics analysis. If one were to learn sooner than competing investors that wishes were about to become horses, only then should one buy stock in a harness factory. If wishes were horses already, there would be no particular reason to believe harness factory stock was under priced.
Earth2tech offers “3 Questions for 3 Energy Storage Experts.” The three questions:
- Why is energy storage so essential to the new energy economy?
- What is the most important use or implementation of energy storage?
- Which energy storage innovation do you most believe in?
Not exactly hard-hitting, investigative journalist-type questions, but useful in inspiring some informative chatter about what is going on in energy storage.
For my tastes, the answers to the first question over-emphasized the importance of energy storage to the respondent’s vision of the future energy economy. I’d be better sold by an answer that emphasized the potential to reduce costs and improve services to energy consumers.
Of course, the question primes for a wishful-thinking answer. The difference between me and the three energy storage experts – other than my obvious lack of energy storage expertise – is that I wish for different kinds of things.
To me the answer to “Why is energy storage so essential to the new energy economy?” is that better energy storage eventually allows the withering away of the state’s specialized regulatory apparatus for the electric power business.
Yeah, I know, I’m a dreamer.