Energy markets are those commodities markets that deal specifically with the trade and supply of energy. Energy market may refer to an
electricity marketIn economic terms, electricity is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use...
, but can also refer to other sources of energy. Typically
energy developmentEnergy development is the effort to provide sufficient primary energy sources and secondary energy forms for supply, cost, impact on air pollution and water pollution, mitigation of climate change with renewable energy....
is the result of a government creating an
energy policyEnergy policy is the manner in which a given entity has decided to address issues of energy development including energy production, distribution and consumption...
that encourages the development of an
energy industryThe energy industry is the totality of all of the industries involved in the production and sale of energy, including fuel extraction, manufacturing, refining and distribution...
in a competitive manner.
Liberalization and Regulation
Energy markets have been liberalized in some countries.
They are regulated by authorities, including liberalized markets, to protect consumer rights and avoid
oligopoliesAn oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...
.
Regulators includes the
Australian Energy Market CommissionThe Australian Energy Market Commission was set up by the Council of Australian Governments through the Ministerial Council on Energy in 2005. The AEMC has two roles in relation to national energy markets - as rule maker and as a provider of advice to Ministers on how best to develop energy...
in
AustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, the
Energy Market AuthorityThe Energy Market Authority is a a statutory board under the Singapore's Ministry of Trade and Industry of Singapore. The EMA's main goals are to promote effective competition in the energy market, ensure a reliable and secure energy supply, and develop a dynamic energy sector in...
in
SingaporeSingapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, the
Energy CommunityThe Energy Community is a community established between the European Union and a number of third countries in order to extend the EU internal energy market to Southeast Europe and beyond...
in Europe, replacing the South-East Europe Regional Energy Market and the
Nordic energy marketNordic energy market is a common market for energy in Nordic countries. It is one of the first free energy markets in Europe and is traded in NASDAQ OMX Commodities Europe and Nord Pool Spot. In 2003, the largest market shares were as follows: Vattenfall 17%, Fortum 14.1%, Statkraft 8.9%, E.on...
for
Nordic countriesThe Nordic countries make up a region in Northern Europe and the North Atlantic which consists of Denmark, Finland, Iceland, Norway and Sweden and their associated territories, the Faroe Islands, Greenland and Åland...
. Members of the
European UnionThe European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
are required to liberalise their energy markets.
Regulators seek to discourage
volatilityIn finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...
of prices, reform markets if needed and search for evidence of anti-competitive behaviour such as trying the formation of a monopoly.
Due to the oil price increases since 2003 and
speculationIn finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...
, energy markets are being reviewed and by 2008 several conferences were organised to address the energy market sentiments of petroleum importing nations. In Russia the markets are being reformed by the introduction of harmonized and all-Russian consumer prices.
United States
A recent example of the failure of government to regulate a market and provide
oversightOversight may refer to:*Oversight , a French Thoroughbred racehorse*Regulation – rulemaking*Separation of powers - the concept of separate branches of government or agencies exercising authority over one another...
enabled
EnronEnron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
to manipulate the energy markets in the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
During 2008 in the United States the
Commodity Futures Trading CommissionThe U.S. Commodity Futures Trading Commission is an independent agency of the United States government that regulates futures and option markets....
is conducting an investigation of energy market conditions.
International Energy Market
See also
- Commodity value
In the field of economics, the commodity value of a good is its free market intrinsic value under optimal use conditions. In a free market, the commodity value of a good will be reflected by its price...
- Cost competitiveness of fuel sources
The Cost competitiveness of fuel sources is a primary factor in determining whether a fuel source will be utilized is whether or not the fuel source is cost competitive in the fuel market...
- Demand destruction
Demand destruction is an economic term used to describe a permanent downward shift in the demand curve in the direction of lower demand of a commodity such as energy products, induced by a prolonged period of high prices or constrained supply....
- Energy crisis
An energy crisis is any great bottleneck in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles...
- Energy derivative
Major players in energy derivatives include major trading houses, oil companies, utilities, financial institutions.-Definition:An energy derivative is a derivative contract based on an underlying energy asset, such as natural gas, crude oil, or electricity...
- Energy intensity
]Energy intensity is a measure of the energy efficiency of a nation's economy. It is calculated as units of energy per unit of GDP.* High energy intensities indicate a high price or cost of converting energy into GDP....
- Food vs fuel
Food vs. fuel is the dilemma regarding the risk of diverting farmland or crops for biofuels production in detriment of the food supply on a global scale. The "food vs. fuel" or "food or fuel" debate is international in scope, with good and valid arguments on all sides of this issue...
- Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
- Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
- Renewable energy commercialization
Renewable energy commercialization involves the deployment of three generations of renewable energy technologies dating back more than 100 years. First-generation technologies, which are already mature and economically competitive, include biomass, hydroelectricity, geothermal power and heat...
- Relative cost of electricity generated by different sources
- Spark spread
The spark spread is the theoretical gross margin of a gas-fired power plant from selling a unit of electricity, having bought the fuel required to produce this unit of electricity...