There is a twitter Q&A with Bloomberg New Energy Finance CEO Michael Liebreich scheduled for tomorrow at 2 P.M. GMT. I am looking forward to the occasion. With this post, I would like to sketch out some questions I would like to ask, if I get the occasion.
Question number one:
If regulation required the amount of oil sold to go down 5% each year, would oil prices and oil company profits rise? (128 characters)
This is of course a very simple question. It does not take a lot of expertise to answer it. Basic market theory says that prices go up when supply goes down. And past observations show that profits of oil companies go up as prices go up.
So why do I think this is the most important question?
That’s because, simple as the answer is, there are so many people who don’t understand it. That includes Bill McKibben, as explained before in my post titled “565 and 2,795 Do the Math on Prices!”.
If it is correct that fossil fuel prices go up with less supply available, and that profits will go up as well, that has some pretty serious consequences for the political fight over reducing fossil fuel consumption. It would become clear that exactly that is in the interest of the fossil fuel companies, as well as the environmentalists.
I am pretty confident that with less supply prices will go up substantially. But I am looking forward to the chance to get this confirmed by Michael Liebreich.
Question number two.
Do you think investor protection in the Energy Charter Treaty is sufficient? (64 characters)
This question is in response to the 2011 White Paper by Liebreich titled “Towards a Green Climate Finance Framework”, which I discussed earlier in this post.
In the White Paper Liebreich calls for an “Investment Treaty” to assure cheap finance (lower risks means lower interest).
I am not sure if Liebreich is aware of the Energy Charter Treaty. If he is, I would be interested in hearing his opinion on why the protection already in place there is insufficient.
Anyway, I am looking ahead to the twitter Q&A. I will update this post after it is over.