Prices spikes

Lippe, D. (2007) Gasoline price spike shifts ethylene feeds. Oil Gas Journal, 105, 56. 

Potatoes yield more calories per acre than any other major crop, a criterion that becomes even more important in light of the planet s ever-increasing population, food shortages, price spikes, and the recent competition for farmland by biofuel crops. Collectively, these facts emphasize the impact potatoes can have on global nutrition. 

Fig. 16.4 Benzene s price spike resulted from pressure all along the chain.

Chinese demand has been the main driver of the world petrochemicals recovery since 2002, and while scenarios exist under which China s demand falters, the consensus view is that it will continue, and that petrochemical prices will be sustained at high levels until new capacity comes online. The products elevated price levels and margins are likely to attract new investments in the next few years. At this point the products seem likely to resume the cycle of overinvestment leading to a price bust later in the decade, followed by a period of underinvestment leading to a new price spike several years later. While the drivers of the price movements contrast with those of crude and natural gas and are more inherently shortterm, they ensure similar and continued price volatility. 

Consumers can also negotiate with feedstock suppliers on upfront payments or payment terms under which they pay a higher price than the lowest market price at the trough, but pay lower prices when product prices spike. An interesting application of this is the potential for an ethane cracker operator to convert the economics of its cracker to those of a virtual naphtha cracker, by paying an integrated gas producer-processor a price for ethane indexed to naphtha-based ethylene production costs. 

For example, market players might artificially create a price spike to prompt the release of allowances into the market. The experience with speculative attacks on currency and exchange rate controls provides some important lessons. 

Shortly after natural gas prices spiked, nitrogen imports into the US reached record levels. When nitrogen prices failed to keep up with gas prices, nitrogen producers began curtailing production and imports became necessary. When prices for natural gas and nitrogen products decreased, imports returned to normal levels... 

In the United States poor profitability resulted in the closure of five urea plants between 1999 and the end of 2002. These plants had a total capacity of 725 thousand tons per year - about 7 percent of the total US capacity in 1999. During this same period, about one-half of the operating plants were either idled for extended periods or turned down in their output because of natural gas price spikes that drove up the cost of ammonia230. 

Allowance banking can also serve this function by creating a cushion that will prevent price spikes and hedge uncertainty in allowance prices (Jacoby... 

Two dimensions of European gas security which are only just beginning to receive the attention which they deserve are the potential problems which can be caused by infrastructure breakdown, and the question of how to ensure the availability of adequate gas storage in liberalized markets. This chapter is not the place to explore these issues in any detail, but it is important to note that the fire at the Rough storage site in February 2006 - arguably Europe s most important gas security incident of that year -deprived the UK of access to around 80 percent of its stored gas for several months. Had the incident happened any earlier or later in the winter, the consequences might have been substantially more serious than the price spikes which the market experienced in the few weeks before temperatures rose and demand declined. ... 

In order to avoid high CO prices or price spikes, cap-and-trade schemes may implement cost-containment measures, including offset provisions, borrowing provisions or price caps. If these provisions are present in one of the linked systems, they will be made available to participants in the other system regardless of whether the other system has the same provisions (Stavins and Jaffe, 2007). The unlimited import of low-cost credits from other sectors and regions will reduce the CO price and total abatement costs in a cap-and-trade system. However, if policy-makers... 

The price of cocaine is nearly 48 percent less in 2003 than it was in 1996, with the purity virtually unchanged. Neither the price nor purity of crack has changed over this time, although there was a price spike from 1999 to 2002. The price of heroin has decreased nearly 30 percent. Except for the drop in purity in the second quarter of 2003, purity has been fairly stable. The price of methamphetamine has decreased nearly 30 percent and the purity has increased by nearly a quarter. The price of marijuana has increased over 12 percent. However, the THC content... 

The commodity price spikes witnessed in the last couple of years, and particularly most recently, are exceptional when viewed from the perspective of the last decade or so hut not so much so when seen in a longer historical context. .. the recent price spike is neither the only, nor even the most important, one to occur in the last 30-plus years. In inflation adjusted terms, today s prices faU weU short of peaks achieved in the early 1970s, and neither current maize nor wheat prices are averaging much above levels achieved as recently as the mid-1990s [3]. 

The factors affecting the costs of Ru and Ir are more subtle. Ru is used in the electronics industry in chip resistors, flat screen displays, and the hard disc manufacturing process. In 2006-2007, an increase in Ru demand from the electronics industry due to changes in the technology in hard disc drives resulted in a price spike, but only for a limited period. Once purchased or leased, a large proportion of Ru metal used in hard disc manufacturing is subsequently recycled, and minimal amounts are actually present in the consumer products, so increased... 

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