RISK AND UNCERTAINTY IN COAL AND OIL MARKET

Though coal provided 42% of the global electricity in 2015, preliminary data of Global Oil Markets (2015) recorded a decline of 2.9% in the same year. Between 2011 and 2014, the capital expenditure increased by 20% while oil prices dropped by 4.2% (Sobczyk&Kicki, 2013). In a study conducted by Edwards (2015) to determine if the global production of coal is declining, he established that in 2014 a decline in coal production was recorded in China and some countries like Ukraine where unrest prevailed.

Australian mining industry faces the risk and uncertainty in coal and oil market. Two factors have been attributed to the reduction in the coal investments. China’s development of a legislation of cleaning up the air in its cities is feared to result to the banning of coal. The ban will put pressure on the Australian coal investments that assume a growing Chinese coal market. Secondly, because of the high risk-averse capital markets, majority of the mining and metal companies’ remain focused on short-term and cost-cutting operations that are aimed at maximizing returns to the shareholders.

Problem Statement                                                                            

Key investors in the coal and oil global market have pulled back on investments in the sector. They attribute their actions to fear of climate change, political risk, and unstable coal and oil global prices. Coal and oil industries face many regulations that determine where, when, and how the extraction is conducted. This study seeks strategies to position the Australian mining industry to survive and thrive the risks and uncertainty in the coal and oil global market.

 

  • Aims and Objectives

This project will investigate the risk and uncertainty in coal and oil markets. The enumerated objectives will help the researcher achieve this aim:

  1. Determining the risk and uncertainty in the coal an oil market.
  2. Determining the effect of global crisis in the coal and oil industry
  • Examining the effect of the risk and uncertainty in the coal an oil market on Australian mining industry.
  • A Brief Methodology

Literature Review

Relevant literature review will be done. Research gaps will be then be identified and used to strength the basis of this research. Search engines such as Google Scholar and secondary sources will be used in conducting literature review.

Research Design

This research study examining the risk and uncertainty in coal and oil markets will employ a descriptive design. A descriptive design is a method of collecting research information by use interviews and questionnaires (LLC 2015). This research design will enable the respondents

Data Analysis

After data collection, analysis will be done using Statistical Package for Social Sciences (SPSS) software. The researcher will test the following null hypotheses:

  • H01: There is no risk and uncertainty in the coal and oil markets.
  • H02: There is no effect of the global crisis on the coal and oil industry.
  • H03: There is no effect of risk and uncertainty in the coal and oil markets on the Australian mining industry.

 

 

References

Cordesman, H., & Al-Rodhan, R. (2014). The global oil market: Risks and uncertainties. Washington, D.C.: CSIS Press.

Edwards, C. (2015). Mineral resource and ore reserve estimation: The AusIMM guide to good practice. Carlton, Vic.: Australasian Institute of Mining and Metallurgy.

Global Oil Markets (2015). Retrieved March 28, 2016, from http://www.tpt.com/resources/docs/resources/CommodityPoint_Crude_Paper.pdf

LLC., D., (2015). Strategic Capabilities: Bridging Strategy and Impact, s.l.: Deloitte.

Sobczyk, J., &Kicki, J. (2013). An Economic Evaluation: Risk analysis of the mineral projects. London: Taylor & Francis.

 

 

 

 

 

 

 

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