Veles Water Water Thoughts
Water Thoughts 2
Lessons From a Vexacious Gas Market
 
  • There is a lesson for participants in US water markets in the stresses and strains currently afflicting UK and European gas markets. Those suppliers which failed to hedge their gas exposures are now unable to profitably supply energy to households at prices subject to the energy price cap imposed by the regulator. The possibility that energy firms may be required by the regulator to hedge their exposures is the subject of discussion.
  • Water markets and gas markets have quite similar properties, in that they comprise a related network of regionally distinct markets.
  • Given the importance of hydropower to energy supplies to some European markets, data on the availability of water has assumed a similar level of significance to the power market as are attributed to levels of gas storage; both indicators are closely monitored by traders
  • A case can be made that inflation in both the US and other developed countries such as the UK is reviving. While forecasting inflation is very difficult, rendering the outlook far from certain in either direction, what does seem to be the case is that the relatively predictable and assured environment in terms of inflation and interest rates that has been characteristic of the financial environment for many years may well have drawn to a close. This gives rise to greater uncertainties which increases the importance of hedging against unexpected and unwelcome price fluctuations.
  • The CPI Water and Sewer Index which includes the costs of water delivery displays mildly countercyclical tendencies, which renders water itself an intriguing hedge against a more uncertain environment. Nevertheless the cost of water delivery as depicted by the index bottomed out in December 2019 and has been on a rising path since then, albeit at a rate of increase lower than the overall rate of inflation. Over time though there has been a tendency for the cost of water supply to increase at a rate in excess of the overall rate of price inflation.
Water Thoughts
The Complexities of Water Policy
  • A Surge In Interest In Esg Investing; Water May Be Next
  • The Worlds of Academia and Finance in Alignment
  • Do Markets Contribute towards the Achievement of Sustainability Objectives?
  • An Intensification of Water Cycles →Increased Demand for Hedging and for Water Futures
  • Water Shortages
  • Fauna and Flora get Thirsty too
  • Pricing Mechanisms and the Law of the Jungle
  • Water Rights and California Groundwater Supplies
  • The Effect of Water Pricing on Incentives             
  • Water a mere Sideshow to Global Economic Outcomes?   
  • The Economics of Renewable Energy – Parallels with Water