Overview
2009 was all about China. Early in the year, when energy prices crashed due to disappearing demand, oil sank to slightly more than $30 barrel from its mid-2008 high of $147 and natural gas from $14 to around $3 per thousand cubic feet. China, flush with cash, for all practical purposes stabilized the market by going on a spending/investment spree in Africa, South America, even Russia. By the end of the year, oil prices had climbed back to more than $70 a barrel, due to the plummeting value of the dollar. (Gas prices has only rebounded to around $5 per thousand cubic feet.)
2009 also saw several countries attempt to use their natural resources for political power — most notably Russia’s decision to freeze Europe last winter (literally) in its displeasure with Ukraine and its natural gas pipeline bottleneck. Result? Europe is desperately developing alternatives sources and pipelines for gas.
Mining prices also tanked early on, with the same response from China. In mid-summer, China ominously arrested employees of mining giant Rio Tinto of charges of spying.
A number of gigantic mergers took place in 2009; most recently oil mega-company Exxon, seeking to become a major player in natural gas, bought regular-size-giant company, XTO, in a deal worth $41 billion.
Finally, 2009 will probably be remembered for the rise of new energy sources — not only green energy, but a transition to unconventional sources of natural gas, including coalbed methane and shale gas. Billions of dollars are being invested, due to new technology.
Those Who Made It The Year It Was:
The Winner: China, for the reasons cited above.
Honorable mention: President Umaru Yar’Adua of Nigeria for taking the first concrete steps to ending the fighting in the Niger Delta, and
President Luiz Lula da Silva of Brazil (for using the energy market) and President Michelle Bachelet of Chile (for using Chile’s copper-based sovereign wealth) to limit the recession’s impact on their countries.
The Rogues’ Gallery: Vladimir Putin of Russia; Ali Ben Bongo (for growing up to be an oil autocrat just like his dad); Hugo Chavez (for the priceless rebuke to his countrymen on the energy shortage: “Some people sing in the bath for half an hour. What kind of communism is that? Three minutes is more than enough!”); Paul Kagame of Rwanda (a hero for ending the genocide there, but who has tacitly allowed the bloodbath in the DRC to continue); Alan Garcia of Peru (for deciding that the indigenous people of his country were too ignorant to understand his leasing of their land in the Amazonian basin); and Idriss Deby of Chad (for using oil to keep himself in power and exacerbate an already tense region).
What Was That Again? (Most Unexpected Event)
China’s announcement that it tends to monopolize its rare earth minerals required for emerging green technology.
Oh, Crystal Ball… What to look for in Energy and Natural Resources in 2010
Conflict
1) Fallout following the Iraqi elections. Big question what will the Kurds do? What about relations between Sunni and Shiite?
2) The strong possibility of war in Sudan, this time between the North and South again. The South, with the oil, votes on secession in 2011.
Power politics
1) More power politics from Iran and Russia.
2) More pipelines in development create more opportunities for profit, energy and political obstruction.
3) The main US question: will the US Congress actually pass a meaningful energy legislation after the chaos of health care?
Money
1) The outcome of the push for global financial transparency in the extractive sector — will dozens of developing countries who have “committed” to making their dealings transparent actually make good?
2) How will China’s acquisitions affect global demand and long-term prices?
3) Can everyone working together keep oil prices stable to sustain the global equilibrium of today?
Green energy
1) Ethanol begins to wilt; farmers go back to growing food for the starving world.
2) Coal has the stake pulled out of its heart by friends in Congress and China, natural gas tries to stab it back in.
3) Water supply becomes a serious problem for green energy
4) We arrive at the gloomy realization that there are no easy answers when it comes to weaning ourselves off oil.
