Tag Archive for economics

Maybe as many as 15 Years of Weak Crude and other energy prices

“WHAT IF:

What if the world is shifting from an “investment phase” of a 30-year commodity cycle to an “exploitation phase?” 

How does this professional assessment of future markets cause you as a railroad or freight carrier to change from Plan A to maybe Plan B or even Plan D?

 

From Bloomberg, Sep 17, 2015

A glut of crude may keep oil prices low for the next 15 years, according to Goldman Sachs Group Inc. That is a very long period.

This strategic commodities report cites in part Jeffrey Currie in an interview at Lake Louise, Alberta.

Goldman’s long-term forecast for crude is at $50 a barrel, he said. He also observed that “the risks are to the downside given what’s happening in the other commodity markets and the macro markets more broadly.”

Lower iron ore, copper and steel prices as well oil and natural gas –PLUS weaker currencies in commodity-producing countries — have reduced costs for oil companies, according to Currie.

The world is shifting from an “investment phase” of a 30-year commodity cycle to an “exploitation phase,” with shale fields as an important source of output, he said.

To read the entire article, go to http://bloom.bg/1JcGYJu

China stock drop // So Large That Losses Eclipsed BRICS Peers, Twice

From Bloomberg, Aug 26, 2015

Take the combined size of all stocks traded in Brazil, Russia, India and South Africa, multiply by two, and you’ll get a sense of how much China’s market value has slumped since the meltdown started.

Bloomberg calculates that China alone has accounted for 41 percent of equity declines worldwide since mid-June.

The scale of China’s stock market drop also exceeds the entire size of the Japanese stock market.

What will be the size of its commercial business drop, given such a large scale loss of investor confidence?

in the same period we already see Brazil hit by a recession as calculated by two successive quarters of slower growth and a negative year over year second quarter economic growth of about 2.5%.

How is this all affecting your strategic planning?

To read the entire article, go to http://bloom.bg/1UdNCpu

Behind the story: Short line rail economics in Western Canada

Progressive Railroading ran a story in March on the conversion of a Canadian National branch line to an independent short line operation. The CN found the branch line uneconomic to keep or to invest in. A short line group reached the opposite conclusion.

What is behind the difference?