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Concept
Energy market
Summary
Energy market is a type of commodity market that deal with electricity, heat, and fuel products. Major commodities being natural gas and electricity. Other commodities traded in the energy market are: oil, coal, carbon emissions (greenhouse gases), nuclear power, solar energy, and wind energy. Due to the difficulty in storing and transporting energy, current and future prices in energy are rarely linked. This is because energy purchased at current prices is difficult to store and sell at a later date. There are two types of markets namely spot market and forward market.
Typically energy development is the result of a government creating an energy policy that encourages the development of an energy industry in a competitive manner.
Until the 1970s when energy markets underwent dramatic changes, they were characterised by monopoly-based organisational structures. Most of the world's petroleum reserves were controlled by the Seven Sisters. Circumstances changed considerably in 1973 as the influence of OPEC grew and the repercussions of the 1973 oil crisis affected global energy markets.
Energy markets have been liberalized in some countries; they are regulated by national and international authorities (including liberalized markets) to protect consumer rights and avoid oligopolies. Regulators includes the Australian Energy Market Commission in Australia; the Energy Market Authority in Singapore; the Energy Community in Europe, replacing the South-East Europe Regional Energy Market; and the Nordic energy market for Nordic countries. Members of the European Union are required to liberalize their energy markets.
Regulators seek to discourage volatility of prices, reform markets if needed, and search for evidence of anti-competitive behavior such as the formation of a monopoly.
Due to the increase in oil price since 2003 and the increase of speculation, energy markets are being reviewed and by 2008, several conferences were organized to address the energy market sentiments of petroleum importing nations.
Official source
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