Buying a lettuce gives me the right, but not the obligation, to make myself a salad.
Professor Graham Davies
The energy world is responding to the price signals and incentives, the game changers – shale gas and tight oil – and the ongoing pressures from geopolitics and other market forces, creating what I call the “energy broadband”.
The energy broadband is a large network of oil and gas storage, pipelines, LNG liquefaction and regasification plants, shipping, and logistical infrastructure that is literally “wiring” the energy world, just like fibre optics and cable wired the oceans and continents during the internet revolution.
But, as was the case with the dotcom bubble, overly optimistic demand expectations can result in overvaluations and overcapacity, so that when the bubble bursts, excess capacity means cheaper prices to consumers, and flattens the world in the process.
The energy broadband is being developed fast and across multiple dimensions.
The network of assets gives optionality (the right, but not the obligation) to all its users. It gives choice. It flattens the world.
During my trips to the Middle East and North Africa, I visited pipeline facilities that were closely guarded by military troops. From Northern Iraq, to Libya, to Egypt, everyone understood the importance of a well-protected network.
“It is a very well-paid job”, a friend of mine told me as we saw the tanks and army personnel ...