Media across nation ask Mark Williams about impact on energy sector of both recent market turbulence and US presidential election
In their coverage of how today’s global financial crisis is affecting the energy sector, and how the US presidential election has been expected to impact it, media across the nation seek commentary from Mark Williams, Boston University School of Management alumnus (MBA ’93) and current executive-in-residence in the School’s Finance and Economics department.
In the November 10, 2008, Financial Times article “Oil price fall checks enthusiasm for alternatives,” journalists Fiona Harvey Richard Waters, and Sheila McNulty report:
Renewable energy has been one of the star sectors of the market in recent years…[b]ut such exuberance could not last. Renewable energy projects often have high capital costs, and the credit crunch has shut down many sources of financing….Mark T. Williams, professor of finance and economics at Boston University, said: “The significant drop in the price of oil and natural gas has now raised the minimum banker lending hurdle.
“The decreased cost in competing energy sources has increased alternative energy project risk and the ability to get funding.’’
For the November 3, 2008, Financial Times article “Energy industry is running out of steam, journalist Sheila McNulty reports:
The credit crisis has cut off much-needed financing for the US power sector, which equity investors have abandoned en masse, setting the stage for a string of mergers or bankruptcy filings….”This feels like 2001-2002 all over again,” said Mark T Williams, professor of finance and economics at Boston University. “It’s an environment exactly like what followed Enron; investors have lost confidence and the equity and debt markets have priced this in.”
Also on November 3, 2008, Marketwatch’s Myra P. Saefong, in the piece “Election jitters’ likely long-term effect on oil,” writes,
Don’t expect the oil market to stabilize immediately after the world finds out who will become the next U.S. president….”Oil prices are driven by macro-economic factors such as supply and demand, the health of the global economy and the strength of the American dollar,” said Mark T. Williams, a risk management expert and finance professor at Boston University. “Politicians and their policies directly influence all three of these economic drivers.”
The biggest difference between Sens. John McCain, R-Ariz., and Barack Obama, D-Ill., is that “McCain has a supply-side strategy [for oil], which includes opening up more drilling. Focus is on using domestic resources to help drill our way out of the problem,” he said. Obama, on the other hand, “wants to take a more demand-side approach with more focus on conservation and alternative energy sources.”
In another piece the same day, also written by Myra P. Saefong (and Polya Lesova), entitled “Future Movers: Oil falls as much as 4% as demand concerns prevail,” MarketWatch reports,
“Oil prices continue to drop as a direct relationship between a weak global economy and demand,” said Mark T. Williams, a risk management expert and finance professor at Boston University.
But “the real story is how will [the Organization of the Petroleum Exporting Countries] react, and will they become more aggressive in restricting supply,” he said in emailed comments.
“Should they become more aggressive in supply quotes, how will this impact the economy? In particular, the global economy is vulnerable and such OPEC-imposed quota restriction could push the economy in even a deeper recession, further pushing down oil prices,” he said.
In the October 29, 2008, MarketWatch article “Crude leads broad rally in commodity futures,” journalists y Myra P. Saefong & Moming Zhou report:
Oil futures surged nearly 8% Wednesday, leading broad gains among commodities as a rate cut by the U.S. Federal Reserve raised the potential for a rebound in oil demand and put pressure on the dollar, prompting oil prices to post their largest daily percentage gain since June…..”The move in oil prices reflect an overly optimist[ic] view that rate cuts will spur increased economic demand for oil,” said Mark T. Williams, a finance professor at Boston University, who is also a former Fed examiner.
“Unfortunately, if the looming global recession happens, further rate cuts will be needed to prop up the economy and oil,” he said in emailed comments.