Review of “The Energy World Is Flat” in China Daily
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China Daily, Life/Business. Monday April 13, 2015
“Against the backdrop of the shale gas revolution in the United States and plummeting oil prices globally, how can investors spot where the energy market is heading?
Written by energy financial experts Daniel Lacalle and Diego Parrilla, the book offers in-depth analysis of today’s rapidly changing international energy markets. This vital resource reveals the economic implications of the relentless quest for affordable, abundant, and clean energy and outlines the winning strategies that allow investors to profit from the energy markets’ ongoing developments.
Solidly grounded in the realm of high-stakes finance, the book explores the history of energy markets in order to draw parallels between past and current shifts.
Lacalle and Parrilla divulge the 10 forces that contribute to the flattening and the globalization of the energy world and include 10 critical lessons from the Internet revolution and the DotCom bubble that can be directly applied to the crude oil and the energy markets.
With the recent developments in growth of the energy industry such as the shale gas revolution in the United States, how can investors know where the energy market is headed in the future?
As the authors explain, the key is to follow capital expenditure. Where is the money invested? What are the incentives? And what is the risk for investors when governments intervene —especially when there is no consideration given to return on investment?
Unlucky investors will likely fall aggressively on the bait of government incentives and short term price signals. Savvy investors will be those that ignore fashionable trends and favor solid return on capital employed as their
key guideline. Investment losers will expect policy changes to solve their strategic mistakes and winners will understand that overoptimistic demand assumptions should not drive investment. Winners don’t wait for the cycle to turn but understand the nature of the cycles and keep their options open.
As the global energy marketplace continues to transform in unexpected and fundamental ways, it has a profound influence on the energy macro- and microeconomic landscape. Investors and analysts will find expert guidance and valuable strategies in this accessible and practical resource.
The book is intended as a forward looking analysis of the energy markets and the implications of their rapid transformation.