Welcome back, I hope that you are all finding these articles as interesting as we do. This week we will only be discussing three articles as two of them are a little bit lengthy and one is an interview.
Here is what we found exciting this week and some thoughts it stirred up.
This article focuses on an oil trader with a physics Ph. D. and how he managed his models, portfolio, and stress during the 2008 financial crisis. The main takeaway for me was that models are very important for many aspects of a business. There is one very large inherent flaw that modeling cannot seem to properly capture – risk profiles. This is because risk profiles are based on past results and data has only been collected and analyzed for a very small portion of history. Beware when someone tells you a percent certainty that a certain outcome will happen, that percentage is most likely based on a very flawed historical representation of history.
This 24-minute podcast features Sophie Lu, Bloomberg NEF’s head of metals and mining, where she discusses political, environmental, and economic challenges of getting battery metals out of the ground and into use. This interesting interview goes to show you that while many people can be aware of a possible supply constraint, that does not mean metal prices will follow. In fact, many battery metal prices have faced challenges over the past several months because the aforementioned supply constraints are not actually showing up in the current market environment.
Renewable energy is at the forefront of every political and environmental speech these days, along with the belief that solar and wind will harness enough energy to power the modern world. The idea that we, as a society, will have to decide whether degrading the environment is worth saving the climate. Fossil fuels are awfully efficient at producing energy and are also not that disruptive to the environment. Oil and gas wells are merely small holes in the ground in comparison to the large open-pit mines necessary to extract the metals used for renewable energy infrastructure. In addition, to build solar and wind farms many acres of natural habitat will have to be disrupted.
Have a wonderful weekend.
The Resource Insider team