However, few of these specialists really understand enough about what the person to the right or left of them does. This tends to breed tunnel vision.
And these days it has become a serious problem.
That's because what is now hitting the oil and gas markets requires a more expansive and integrative understanding of what is actually taking place.
The truth is energy markets are evolving.
We are entering a period in energy and oil prices that I have begun calling the "New Normal."
You see, a volatile, dynamically changing combination of factors now undermines the traditional way of viewing oil and gas markets.
And it is about to get a whole lot more unnerving for the average analyst who still insists on pushing square pegs into round holes.
Unfortunately, for the old school aficionado, we are rapidly moving into new territory. Here, market machinations are occurring that defy the "traditional" explanations.
Oil Prices and the Talking HeadsYou know what I mean by "traditional."
The talking heads on television try to explain the latest spurt or dive in oil prices by relying on the same trite and tired lineage of explanations.
In just the last month, we've seen movements in energy prices justified solely on the following factors:
- A supply glut in Cushing, Okla.;
- Fluctuations in the euro-dollar exchange rate;
- The European credit crunch;
- The latest unemployment figures;
- Manufacturing, housing, or production figures.
There are several factors contributing to this New Normal, but I will be restricting my comments this morning to just three.
- The balance between conventional and unconventional production;
- Increased market volatility; and
- Global geopolitical matters.