Hedging and Peak oil: Difference between pages

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Traditionally hedging refers to the process whereby a firm uses financial instruments (such as forward contracts, futures contracts or options) or other techniques to reduce the impact of fluctuations in such factors as the market price of credit, foreign exchange rates, or commodity prices on its profits or corporate value.
The maximum global total rate of oil extraction and the date of the maximum rate.  


Other techniques may operational or structural responses, for example re-locating manufacturing or assembly to align the currencies of costs with revenues.
When global Peak oil extraction has passed, global total oil usage must also necessarily decline.  


Following such successful structuring, the organisation may then be said to be 'naturally' hedged.
Opinions vary about whether global Peak oil will occur in the near future, or whether it has already passed.




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2.


The application of hedging  techniques has been extended to the management of many other risks including, for example, inflation and longevity risk arising in pension funds.
The similarly defined rate and date in relation to a smaller entity, for example an individual country.




== See also ==
3.
* [[Arbitrage]]
 
* [[Authorisation]]
A shorthand term summarising the impossibility of basing long term sustainable growth on finite physical resources. 
* [[Covering]]
 
* [[Deal contingent forward]]
 
* [[Delta hedging]]
<span style="color:#4B0082">''''''Peak demand' new worry for fossil fuel producers'''''</span>
* [[Effective]]
 
* [[Foreign exchange forward contract]]
:"Remember 'peak oil'? ...
* [[Futures]]
 
* [[Guide to risk management]]
:It never happened. In the event, more and more oil and gas keeps being discovered...
* [[Hedge accounting]]
 
* [[Hedge fund]]
:This has given rise to a new worry for fossil-fuel producers - 'peak demand'. Already, demand for hydrocarbons in advanced economies is beginning to fall. Rising use in the developing world ensures that, overall, global consumption should continue to grow for some years to come yet, but the peak may be much closer than generally appreciated...
* [[Interest rate guarantee]]
* [[Macro hedging]]
* [[Option]]
* [[Outturn]]
* [[Overhedging]]
* [[Pre-hedging]]
* [[Pre-settlement risk]]
* [[Reduce]]
* [[Risk response]]
* [[Speculation]]
* [[Transfer]]
* [[Uncovered]]
* [[Underhedging]]
* [[Warehousing]]


:Renewables are very unlikely to replace hydrocarbons entirely... But we could be looking at a much swifter decline than generally imagined, with big implications for the price of oil and, therefore, the future of its main producers."


===Treasurer articles===


*[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, 2015]]
:''The Treasurer magazine, March 2017, p15 - Jeremy Warner, assistant editor of The Daily Telegraph.''


*[http://www.treasurers.org/node/8925 Harness your hedges, April 2013]


*[http://www.treasurers.org/node/689 Interest rate hedging: demand the proof, 2008]
== See also ==
* [[Carbon tax]]
* [[Carbon trading]]
* [[CNG]]
* [[Hydrocarbons]]
* [[LDO]]
* [[LNG]]
* [[LPG]]
* [[OPEC]]
* [[Petrodollar]]
* [[Petroyuan]]
* [[Renewables]]
* [[SKO]]
* [[Stranded assets]]


[[Category:Manage_risks]]
[[Category:Ethics_and_corporate_governance]]
[[Category:Risk_frameworks]]

Latest revision as of 03:34, 9 July 2021

1.

The maximum global total rate of oil extraction and the date of the maximum rate.

When global Peak oil extraction has passed, global total oil usage must also necessarily decline.

Opinions vary about whether global Peak oil will occur in the near future, or whether it has already passed.


2.

The similarly defined rate and date in relation to a smaller entity, for example an individual country.


3.

A shorthand term summarising the impossibility of basing long term sustainable growth on finite physical resources.


'Peak demand' new worry for fossil fuel producers

"Remember 'peak oil'? ...
It never happened. In the event, more and more oil and gas keeps being discovered...
This has given rise to a new worry for fossil-fuel producers - 'peak demand'. Already, demand for hydrocarbons in advanced economies is beginning to fall. Rising use in the developing world ensures that, overall, global consumption should continue to grow for some years to come yet, but the peak may be much closer than generally appreciated...
Renewables are very unlikely to replace hydrocarbons entirely... But we could be looking at a much swifter decline than generally imagined, with big implications for the price of oil and, therefore, the future of its main producers."


The Treasurer magazine, March 2017, p15 - Jeremy Warner, assistant editor of The Daily Telegraph.


See also