Last week I represented ZE at the NAEMA Spring Conference in Ponte Vedra, FL. As always, NAEMA provides an important indicator of market sentiment. Given that NAEMA is a forum for all those involved in and that support energy trading, the view you get is larger than that of just the front office and includes originators, mid office and the serving community. Not surprisingly, given the prevailing economic conditions and specific depression in North American natural gas and power markets, traders are feeling tentative.
While green/alternative energy is still getting spin time, proponents of nuclear and clean fossil technologies are once again able to articulate the need for dependability and lower cost base resources without being labeled and side barred. The glut of renewable credits and weakness in these markets further strengthens the argument for traditional resources. Notwithstanding, the desire for green / alternative resources remains ahead of the market appetite and technological ability to absorb the resources. It will be interesting to watch how the generation resource mix develops over the next few years, especially if there is an abundance of cheap natural gas. Does the US switch to the export side of the energy business or retain natural gas for internal industrial development?
The pressure and uncertainly that remains with Dodd Frank is seen as another complicating factor, as market participants scramble to prepare and understand the possible impacts of market liquidity and individual operations. The feeling is that financial, technical and regulatory firms are set to collide with difficult to predict outcomes. There is some sentiment that regulatory interference can be blamed for much of the current market stagnation; however, it is hard to prove that energy regulation or the FERC could possibly be the cause of worldwide economic woe. More likely, a lack of oversight / understanding – generally of complex markets and market instruments, combined with poor national fiscal policies – would be more accurate. Regulation, good or bad, tends to follow – not lead – market conditions.
Despite the market qualms, it was great as usual to meet with industry friends from across North America for three days of networking and lectures. The conference started with a “Women in Energy” panel which was well received and set the conference off on a positive note. The Energy Authority was a great host, and their hospitality, as well as the hospitality of Mike and Mike, is much appreciated. We look forward to the NAEMA 2012 Fall Conference in Duluth, MN this August.