The paper is the result of the attempt to subject the socio-economic world of energy to an analysis regarding a phenomenon called the ‘Black Swan’. This concept has been made popular by Nassim Nicholas Taleb, who has become a popular point of reference ever since the beginning of the financial crisis in 2007. Based on his work, the paper first defines the concept of the ‘Black Swan’ as an extremely unlikely high impact event, which is evidently unpredictable ex ante; however, is regarded as potentially avoidable by most observers ex post facto. The underlying assumption is, that against commonly held believe, it is not a long chain of incremental and statistically relevantly many events that makes history, but a seemingly insignificant number of outliers, or hence, ‘Black Swans’. Consequently, in its second part the paper focuses on a critical examination of the strategic prediction models used in the energy business today, which are mainly based on driver based models. Relying on Gaussian Bell Curve type normal distributions in order to predict future supply and demand, these models try to predict future price and value chain developments, ultimately searching for a strategic direction. Using historic data and experiences in order to review to what extent the ‘Black Swan’ influenced the development of the energy world in the past, the paper questions this approach by showing that time and again similar predictions have been rendered obsolete by real developments. In order to apply the necessary methodological rigor, ‘Black Swans’ and their impact are measured according to predefined criteria and indicators, elaborated in the first part of the paper. These indicators are mainly qualitative, however, as an empirical anchor the paper uses the historical development of the oil price, focusing on peaks and lows. The most striking historical cases of sudden price rise or decline are examined in detail in order to find commonalities and differences. Finally, based on the findings of this historical analysis, the paper raises the question, whether it is possible to draw any practical conclusions for the future, looking for methods, which could provide protection from ‘Black Swan’ events.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Methodological framework and definitions
- The 'Black Swan' a concept and its application
- How to measure ‘Black Swan' impact - energy prices as an indicator
- A critique of Energy outlooks - predictions in the light of ‘Black Swans'
- Analysis The 'Black Swan' in the history of oil and electricity
- Oil a global commodity in turbulent times
- 1945-1970 - A phase of stability
- The oil shock and how it changed the world
- The Iran Crisis
- The 1986 oil price collapse
- The late 80s, the demise of Communism and the first Gulf Crisis
- 9/11 and its aftermath
- Electricity - a versatile necessity in times of crisis
- The role of electricity prices
- The California Energy Crisis
- The 2008 Central Asia Energy crisis
- The 2011 Tsunami
- Oil a global commodity in turbulent times
- Is protection possible? Discussion and outline of risk mitigation measures
- Summary and Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to analyze the impact of “Black Swan” events on the energy industry, focusing on oil and electricity. It explores the concept of “Black Swans” as unexpected and high-impact events, particularly in their negative manifestations. The paper critically examines the ability of current strategic prediction models in the energy sector to account for these events. Furthermore, it delves into historical occurrences to illustrate how “Black Swans” have influenced the past and assesses potential methods to mitigate their impact in the future.- The “Black Swan” concept and its application in energy
- Historical examples of “Black Swan” events in the oil and electricity industries
- Limitations of current energy prediction models
- Risk mitigation measures and strategies for managing “Black Swan” events
- The importance of understanding and preparing for unpredictable events in energy markets
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the concept of "Black Swan" events and their relevance to the energy industry. It emphasizes the significance of understanding and mitigating risks associated with unpredictable events in a world increasingly reliant on energy. It also outlines the paper's objectives, methodology, and scope.
- Methodological framework and definitions: This chapter defines the "Black Swan" concept as popularized by Nassim Nicholas Taleb, highlighting its characteristics and potential impact. It discusses the use of energy prices as an indicator to measure the impact of "Black Swans," critically examining current energy outlooks and their limitations in predicting these events.
- Analysis The 'Black Swan' in the history of oil and electricity: This chapter analyzes historical occurrences in the oil and electricity industries to demonstrate the impact of "Black Swans." It covers key events such as the oil shocks, the Iran Crisis, the 1986 oil price collapse, the late 80s and early 90s conflicts, and the 9/11 attacks in relation to the oil market. It also explores the California energy crisis, the 2008 Central Asia energy crisis, and the 2011 Tsunami in the context of the electricity sector.
Schlüsselwörter (Keywords)
This paper focuses on the concept of “Black Swan” events, their impact on the energy sector, particularly oil and electricity, and the limitations of existing prediction models. It highlights the importance of understanding and mitigating risks associated with unforeseen events in energy markets. Key concepts include “Black Swan” theory, energy prices, risk management, and energy policy.- Citation du texte
- Magister Artium Ullrich Müller (Auteur), 2012, Oil, electricity and Taleb’s ‚Black Swan‘, Munich, GRIN Verlag, https://www.grin.com/document/204104
