Trouble in Egypt spells trouble for global energy market

Although Egypt is hardly one of the Middle East’s primary producers of oil, now that the country finds itself in the midst of a political-military meltdown, we should begin to consider the short-term and long-term effects on neighboring countries and the global market.

Egypt controls the Suez Canal and Sumed Pipeline, two key sources of export/import. Luckily, experts are saying that a hiccup in the flow of oil through the country seems unlikely – good news for foreign investors.

However, those investors are keeping a close eye on Cairo, the Egyptian capital, where further violence could scare private equity right out of the country. What’s worse – violence could spread like a disease to neighboring countries, sending the entire Middle East spiraling out of control.

“In addition to the human toll, the violence and political turmoil in Egypt is beginning to affect investor sentiment," says Russ Koesterich, a chief investment strategist at BlackRock, the world's largest investment management corporation.

Investors are appreciative of the role Egypt’s $538 billion economy plays in keeping the volatile territory at bay. The worst case is a straight closure of the Suez Canal, which links the Mediterranean and the Red Sea. The canal transported 13% of the country’s liquefied natural gas (LNG) and 7% of sea-traded oil last year. A closure of the 101-mile long canal could send oil prices skyrocketing again - not only in the Middle East, but all across the world.

Another scenario involves terrorism. Sabotaging a single point along the 200-mile Sumed Pipeline, for example, would cut a strategic route for oil and gas exports to Europe and North America. The pipeline carries approximately 2.5 million barrels a day – that’s a lot of oil to just go missing from the global market.

The energy industry is also on the watch for terrorist plots against key instillations. Threats could force them to shut down and evacuate employees. That wasting time means wasted money. And who ends up fitting the bill? Why you, of course. Higher rates, premiums – you name it.

Few people even care to consider what happens if the Middle East goes completely crazy. Think Hollywood apocalypse. First the collapse of domestic governments. Ripples across the global market. Food and gas shortages. Terrorism the likes of which we’ve never seen. Nuclear retaliation.

Sure, you might think this all sounds a little paranoid, but in the globalized 21st Century, a single falling domino can topple the entire chain. Hopefully Egypt won’t prove to be that first domino.

NRGLab and the global energy imbalance

For years, the United States has been one of the biggest energy hogs and contributors to global warming. Accounting for less than 5% of the world’s overall population, Americans consume 20% of our available resources! This imbalance has sent a tidal wave across energy markets and foreign trade. Will the global economy ever be able to recover?

The U.S. congress is considering passing the Energy Savings and Industrial Competitiveness Act, a piece of legislation that would create incentives for companies willing to make energy-efficient renovations.

Last winter, President Barack Obama proposed a similar $200 million state-run program intended to raise green-energy awareness throughout the industrial complex. The National Association of Manufacturers and the U.S. Chamber of Commerce were two of several groups that supported the bill. The Senate estimated that consumers would have saved roughly $23 BILLION by 2030. But unfortunately, the bill didn’t receive the necessary votes, and slowly suffocated in red tape.

Sarbjit Nahal, Head of Sustainability Strategy at the Bank of America/Merrill Lynch, has been studying the effects of the power imbalance since the financial collapse back in 2008. He predicts that the rise of the middle class in countries like India, China, and Brazil will increase the U.S. consumption demand, up to as much as 30% of the entire world’s energy, by 2035.

"End-use energy efficiency offers the greatest potential to lower both energy demand and CO2 emissions,” says Nahal. “It offers considerable low-hanging fruit given that two-thirds of the economic potential to improve energy efficiency remains untapped.”

Nahal estimates that for every dollar invested in energy-efficient upgrades, a company can expect to yield between $2 and $4 annually in savings. Not only are upgrades fiscally responsible, they’re environmentally responsible as well.

"Energy consumption within buildings is the single largest component of global energy use and CO2 emissions, at 40 and 30%, respectively," says Nahal. “[But] little of this has been captured. 80% of the economic potential of energy efficiency in buildings remains untapped."

According to Pike Research, a consulting firm that provides in-depth analysis of global technology markets, U.S. investments in green energy are up 750% from 2005, and are expected to exceed $200 BILLION by 2016.

Now the question is: how are you going to profit from all of this?

Companies like NRGLab are giving individuals, families, and manufacturers the opportunity to gain energy independence with the emission-free SH-Box, an electrical generator that weighs next to nothing! Yes, you could be paying as little as $0.03 per kW for 100% clean electricity. Join the wave of investments in the energy industry before somebody else soaks up all the profits!

Visit nrglab.asia for more information on the SH-Box and other green energy projects.