June 14, 2011 • Current Events, Perspectives

What do energy-risk managers, meteorologists, geologists and evangelists have in common?

by Roger Durham

Stormy times

This year, energy-risk managers, meteorologists, geologists and evangelists have all had their hands full trying to interpret the signs. It’s been a devastatingly busy year. There were record snowfalls and rain totals in many parts of the United States during the winter and early spring. There was the earthquake and tsunami in Japan in March. Tornadoes ripped through Alabama and Missouri in April and May. Communities along the Ohio and Mississippi rivers were overwhelmed with floods, with more flooding to follow out west as rivers brace for the runoff from what was a record snow pack  in many of the ranges from Montana to the Sierra Nevada.

It’s been a crazy year. And June is off to a fast start with the wild fires in Arizona and the volcano eruption in Chile. To top it off, while all of that has been going on, Harold Camping, a radio evangelist, declared to anyone who would listen that the end of the world would arrive on May 21, 2011. Obviously it didn’t, but for those who were so inclined, the signs seemed to point in that direction.

Volcano in Chile

The business of forecasting, in every discipline, has been an extraordinary challenge in 2011. Whether predicting weather, anticipating geologic events, or looking for signs of the end of time, it’s been a busy and confounding year.

Energy has been no different. While companies have looked to energy consultants for decades to help with cost reduction, the real value of an energy and sustainability strategy in times such as these is that it allows companies to manage the risk inherent in energy markets. Ultimately, energy risk management is the name of the game.

Most often, when we think of energy risk management, we think about price risk. But think about the energy supply challenges that communities around the world have faced this year. In the most basic of terms, supply of energy has been put at risk in Japan, Alabama, Missouri, Arizona, Chile and the list could keep going. How important is it to have energy professionals at your side, doing everything possible to mitigate the risks associated with the interruption of energy supply upon which business and commerce depend? And how important is it to have a trusted advisor who is able to “read the signs” and build reasonable expectations about the movement of energy prices in the future?

Rained Out

It’s pretty important, I would say – certainly worth consideration. After all, who plans a picnic without checking the weather forecast? I’m just saying….

© 2011 Summit Energy Services. All rights reserved.