GGR333H5 Lecture Notes - Lecture 2: Hedge Fund, Carbon Price, Volatility Risk
Document Summary
Major speculative activity in oil huge changes in price but not in supply/demand stockpiling oil for future demand increases prices. How are current : through trading and storage, hedge fund investments will lead tenfold in the future. What causes current and future : investors can trade past contracts for future contracts contract arbitrage make the future price relative to the current price. The push to revive coal production in the us. The us as major coal reserves more than any other fuel source. The us wants to invest in coal to become energy sovereign and become independent from other fuel sources that make them dependent on other countries. Its more advantageous to invest in oil production for suppliers and investors due to increasing prices as shown in the graph. Coal is one of the dirtiest energy sources in terms of pollution, etc.
