Jenny Considine

Jenny Considine

Canmore, Alberta, Canada
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  • The effects of a shock to critical minerals prices on the world oil price and inflation

    Energy Economics

    Critical minerals (CMs) such as lithium, cobalt, nickel, and rare earth metals, are essential to the development of clean energy technologies, electronics, and defense and space industries, among others. Demand for these minerals is expected to grow quickly as energy transitions accelerate. As the post-pandemic economic recovery demonstrated, disturbances in CM supplies can also create serious bottlenecks in global supply-chains. In this study, we develop a GVAR model that can examine the…

    Critical minerals (CMs) such as lithium, cobalt, nickel, and rare earth metals, are essential to the development of clean energy technologies, electronics, and defense and space industries, among others. Demand for these minerals is expected to grow quickly as energy transitions accelerate. As the post-pandemic economic recovery demonstrated, disturbances in CM supplies can also create serious bottlenecks in global supply-chains. In this study, we develop a GVAR model that can examine the consequences of market disturbances from CM price shocks on major global and country-specific macroeconomic indicators. Counterfactual simulations of a CM price shock suggest that that CMs, as a rising industry, are starting to have an impact on the macro level. The industry and its impacts are not fully developed yet but appear to have diverse implications across countries similar in some respects to the current major commodity – oil. A CM price shock has statistically significant implications for inflation in the UK and South Korea. At the same time, geopolitical shocks to crude oil prices have significant implications for CM prices. The cross-price elasticity of oil with respect to CM prices is positive in the United States, where CM's and oil are substitutes, and negative for Saudi Arabia where CMs and oil are compliments. These scenarios indicate the unsuitability of a one size fits all energy policy and a need for closer examination of the national and country specific relationships between the oil and CM sectors.

    Keywords
    Critical mineralsRare earth metals, Oil, GVAR, Price shock, Inflation

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  • Inventories and the term structure of oil prices: A complex relationship

    Resources Policy

    Abstract
    According to conventional storage theory, the difference between spot and futures prices (known as the ‘basis’) can be explained by the total cost of storing a commodity for a specific period of time. The theory predicts a positive relationship between inventory levels and the basis, and a negative correlation between inventories and marginal convenience yield. We investigate whether there is a defined and quantifiable relationship between inventory levels and market structure –…

    Abstract
    According to conventional storage theory, the difference between spot and futures prices (known as the ‘basis’) can be explained by the total cost of storing a commodity for a specific period of time. The theory predicts a positive relationship between inventory levels and the basis, and a negative correlation between inventories and marginal convenience yield. We investigate whether there is a defined and quantifiable relationship between inventory levels and market structure – defined as the basis or the corresponding degree of contango/backwardation – and what the exact nature of that relationship might be. The major drivers of inventories – the cost of carry, convenience yield and spread options value – are estimated for eight major international storage hubs using daily data from December 21, 2015, to January 25, 2019.

    The analysis indicates that basic predictions of inventory theory are valid for daily and weekly frequencies but become less reliable for lower frequency data. We propose an alternative: a spread option-based formulation that adds a locational dimension to the theory and is based on the prices of crude oil at different locations, factoring in costs of storage and transportation, and the time required to transport oil between them. This methodology offers a viable alternative to the traditional cost of carry approach; it can estimate implied convenience yields and the shadow price of inventories. The data and methodology proposed in this study can give policy makers a better understanding of implied convenience yields, shadow storage prices, and market direction. It can also facilitate the construction of timely and efficient policies in the domains of energy security, market stability, and the management of public crude oil inventories. A better understanding of the relationship between inventories and the term structure of oil prices can assist market participants in trading, hedging and inventory management.

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  • The sensitivity of oil price shocks to preexisting market conditions: A GVAR analysi

    Journal of Commodity Markets

    This study develops a Global Vector Autoregression (GVAR) model to simulate various types of shocks to oil markets and to see whether such shocks are time-sensitive in oil markets. Our model extends the canonical Mohaddes and Pesaran (2016) model temporally (to 2018Q3), spatially (including Russia, Iran, and Venezuela), and by adding oil inventories as an additional country-specific variable. Two of its characteristics make GVAR particularly suited to this analysis. First, the GVAR framework is…

    This study develops a Global Vector Autoregression (GVAR) model to simulate various types of shocks to oil markets and to see whether such shocks are time-sensitive in oil markets. Our model extends the canonical Mohaddes and Pesaran (2016) model temporally (to 2018Q3), spatially (including Russia, Iran, and Venezuela), and by adding oil inventories as an additional country-specific variable. Two of its characteristics make GVAR particularly suited to this analysis. First, the GVAR framework is specifically designed to account for the interaction between many countries. Second, world oil supplies and inventories are modeled jointly with key global and country-level macroeconomic variables. The results indicate conditions existing in the markets prior to the disturbance determine the global economic implications of an oil price shock. To cite only one example, a negative price shock in markets characterized by loose inventories will have significant negative implications for real GDP in the consuming nations, specifically Europe Latin America, and the Asia Pacific. In tight markets, on the other hand a negative price shock has the potential to increase real GDP for the world as a whole.

    Keywords
    Oil priceOil inventoriesOil marketsShockGVARSimulation

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  • Handbook of Energy Politics Edited by Jennifer I. Considine, University of Dundee and Keun-Wook Paik, Energy, Environment and Development Programme, Chatham House, UK

    Edward Elgar Publishing

    Starting with the fundamentals of the global energy industry, Handbook of Energy Politics goes on to cover the evolution of capital and financial markets in the energy industry, the effects of technology, environmental issues and global warming and geopolitics. The book concludes by considering the future, including the lessons learned from history, where we are most likely to be heading and what steps we can take to mitigate potential energy risks. This Handbook will be an invaluable resource…

    Starting with the fundamentals of the global energy industry, Handbook of Energy Politics goes on to cover the evolution of capital and financial markets in the energy industry, the effects of technology, environmental issues and global warming and geopolitics. The book concludes by considering the future, including the lessons learned from history, where we are most likely to be heading and what steps we can take to mitigate potential energy risks. This Handbook will be an invaluable resource for upper level graduates and postgraduate scholars

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  • The Russian Oil Economy

    Edward Elgar

    In this unique work, Jennifer Considine and William Kerr contend that while OPEC currently dominates the international oil market, Russia will be a key player in the future international energy market. Indeed, Russia’s petroleum resources rival those of Saudi Arabia.

    More than almost any other industry, future performance is often determined by the influence of decisions made in the past. This book provides a detailed history of the development of the Russian oil economy in order to…

    In this unique work, Jennifer Considine and William Kerr contend that while OPEC currently dominates the international oil market, Russia will be a key player in the future international energy market. Indeed, Russia’s petroleum resources rival those of Saudi Arabia.

    More than almost any other industry, future performance is often determined by the influence of decisions made in the past. This book provides a detailed history of the development of the Russian oil economy in order to build up a comprehensive and discerning picture of its future role and significance in the global energy market of the 21st century.

    The authors of this path-breaking treatment of the Russian oil economy present:
    • an assessment of the effects of the political and macroeconomic development of the Russian Federation and former Soviet Union on the resources, reserves and infrastructure of the current oil industry
    • an economic evaluation of the contemporary policies and institutions in the Russian Federation, including policy recommendations and forecasts
    • detailed statistics on all aspects of the Russian oil industry, including reserves, production, five-year planning targets, government policy, and tax rates, from 1860–2001.

    The Russian Oil Economy will be of enormous interest to a wide-ranging audience, encompassing oil industry executives and analysts, investment bankers, energy consultants, energy policymakers, and those involved in the study, teaching and research of energy, Russian history and transition.

    Other authors
    • William A Kerr
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