Risk Management and Price Volatility
The Role of Risk management in the managing price Volatility in the Global oil and Gas Market Energy is a basic requirement for all human activity. A main characteristic of every culture and society throughout history has been the way in which it has used the energy resource at its disposal, and the per capital consumption of energy is the common measurement of its level of development. The oil and gas market are the driving force of the global economy and accounts for an ample of the world’s energy consumption. This is the process of organizing, at various levels, the commerce of bringing Oil and Gas from the wellhead to end-users.
Price volatility is the “Sustained, unpredictable price movements that frustrate the economics of high-load-factor use of natural gas in industrial, chemical, and power-generation applications (on the upside), or frustrate the organized, sustained growth of deliverability from domestic onshore unconventional resources.”(Task Force on National Gas Stability, 2010) These Erratic and Unpredictable changes in prices and the dominant reliance of the economy on crude create concern, uncertainty and indirect cost to the economy. This affect decision making and in other to manage the concerns, uncertainty and indirect cost that are associated with the oil and gas markets, Risk management is introduced.
Risk management is the systematic ongoing process by which an organisation identifies, prioritizes and implements programmes to reduce the chance of negative outcomes on a business (Wayne Harrop's). In this case effective risk management helps to assess the unpredictable changes in prices, its possible economic impact and
Produce strategies to curtail the impact of price volatility.
The focus of this review would be to accentuate the causes of price volatility, and how effective risk management minimizes dangers of price volatility in the global oil and gas market.
Origin of Price Volatility
Causes of Price volatility
There
Price volatility is the “Sustained, unpredictable price movements that frustrate the economics of high-load-factor use of natural gas in industrial, chemical, and power-generation applications (on the upside), or frustrate the organized, sustained growth of deliverability from domestic onshore unconventional resources.”(Task Force on National Gas Stability, 2010) These Erratic and Unpredictable changes in prices and the dominant reliance of the economy on crude create concern, uncertainty and indirect cost to the economy. This affect decision making and in other to manage the concerns, uncertainty and indirect cost that are associated with the oil and gas markets, Risk management is introduced.
Risk management is the systematic ongoing process by which an organisation identifies, prioritizes and implements programmes to reduce the chance of negative outcomes on a business (Wayne Harrop's). In this case effective risk management helps to assess the unpredictable changes in prices, its possible economic impact and
Produce strategies to curtail the impact of price volatility.
The focus of this review would be to accentuate the causes of price volatility, and how effective risk management minimizes dangers of price volatility in the global oil and gas market.
Origin of Price Volatility
Causes of Price volatility
There