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Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

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Japan’s Uncertain Energy Future

This column is being written later in my day than usual as I was completing a two-part interview with the NHK network, the PBS of Japan.  

In two marathon sessions, their producers grilled me on every angle of energy for two one-hour documentaries they’re preparing for the end of May. The show is the Japanese version of “60 Minutes” and the most watched show in Japan.  

The experience was fascinating but also focusing, because being questioned by the Japanese reminded me, if I ever forget, of the global nature of the energy question and the particular challenges that Japan faces.

This is clear because Japan is the third largest economy by GDP yet is the one developed nation I can think of with virtually zero domestic energy resources, save for some hydro assets in the North.  Obviously, the geopolitical and financial events that affect energy motion and energy prices are of greater interest to the Japanese than most any other people, and in stark contrast to the bizarrely backwards energy policies here in the US.  

These documentaries will be particularly closely watched because of the Fukashima nuclear crisis of 2011, which unleashed a deep debate inside Japan about the future of Nuclear energy in a nation that already depends upon imports of fossil fuels for the majority of their energy needs.  Their desire to understand the financial inputs into prices of crude oil and natural gas as LNG is far more intense than here at home and they are watching much more closely than we are the dispensation of the Ukraine crisis and how that will affect the flow and prices of energy from Eastern Europe and Russia into Asia.  

The questions I was asked pointed up the confusion that the Japanese have about energy pricing and the future of global energy sources.  They particularly wanted insight about the hydraulic fracturing revolution here in the United States and wanted explanations on why such a bonanza of both fracked oil and gas hadn’t resulted in lower prices for energy in Japan.  

Indeed, the Fukashima disaster and retreat from nuclear power had helped to spike LNG prices in Japan, now averaging more than $20/mcf – a fine premium from the $4.50 we see here.  And crude oil, particularly Brent crude, has defined the price that the Japanese have paid for input crude oil for their refineries and continued to average well over $110/barrel since 2011.

One last subject we spent a lot of time on was the future of energy pricing.  There is anxiety you can feel from the Japanese, in that they know that the policies of other nations hold the keys to the sources and prices they’ll be forced to pay.  That helplessness is a fact of the Japanese economy and it is no wonder that they are looking for some insight and good news on the future of American and global plans for development of new sources and smart politics.  

On this subject, unfortunately, I couldn’t be very encouraging.  Much of my new book is devoted to describing the rogues, misinformation and missed opportunities I have witnessed in the energy world since the financial crisis of 2008.

My interview with the Japanese might not have been very hopeful, but it was eye opening for us both. 

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