Customer Reviews

Energy Risk Management: Hedging Strategies and Instruments for the International Energy Markets

5 star:		(7)
4 star:		(1)
3 star:		(0)
2 star:		(0)
1 star:		(2)

 

 

Rather disappointing experience; very superficial and of little help for practicioners in the energy market. Much better: "Energy Risk" (by: Pilipovic) or "Managing Energy Price Risk"; 2nd Edition (by: Financial Engineering Ltd.)

Until Peter Fusaro's book "Energy Risk Management" hit the bookstores in 1998, anyone needing a clear explanation of how risk is managed in the energy markets had to sift through numerous trade publications and journals.

This was genergally the reaction of any industry participant I spoke to, independently of whether they were clients, students or collegues of mine both from the Energy community or from academia. Therefore, with this feedback, I would strongly encourage my collegues to read Peter Fusaro's new book "Energy Derivatives: Trading Emerging Markets" which he edited with Jeremy Wilcox and was published in October of this year. In this book Peter Fusaro and his team of energy professionals take the reader deeper into the secondary markets (energy derivatives, etc.) which have emerged as a result of the deregulation process of the Energy Industry and, most importantly, the book explains how to use these markets to manage energy risk. Further, in chapter 3, 4, 5 and 6 the reader is introduced to the concept of interdependency among energy markets and other related markets. These include weather and weather derivatives, emission trading and bandwidth - the most recently emerging market converging with Power to become the backbone of the new global economy. This is the first book to address the complex topic of convergence of power and the rapidly growing bandwidth market. For this reason alone this book becomes a must for everyone who is interested in becoming a part of the evolving energy market.

This timely and useful book introduces the many new markets for energy futures and derivatives to readers who are conversant with the basics of risk and finance. In the U.S. these markets have grown with the deregulation of gas and electricity, and they will grow further as states begin allowing consumers of all sizes to bypass local utilities and trade with suppliers of their choice. Because the underlying volatility of gas and electricity prices exceeds that of any other major commodities, consumers and marketers must become familiar with a new range of financial instruments that will help them to cope with new risks.

Most readers will have little difficulty navigating chapters that introduce the basic instruments and the history and institutions of the markets in which they are traded. (Even for those who don't know much, there is as good an introduction as I have ever seen to the basics of the Black-Scholes option pricing model and the analysis of Value-at-Risk.) Fusaro and other authors then proceed to lead the reader on chapter-long tours of markets that range across the world, from Asian oil to European Electricity, and extend in time to markets still in formation such as U.S. coal futures. For all the book's virtues, Fusaro did choose to include a chapter on "technical analysis" of price charts that is straight out of the "How I Made a Million..." genre. This book isn't for that type of reader. It is for people who will have to live with market reality in the future and want a head start in understanding it today.

This book provides an excellent background and review in easy to understand language about energy trading and energy risk management. I highly recommend it for understanding the basics of this complex subject. It also provides a global overview of market developments. It is not, however, a quantative treatise on energy and financial derivatives. This is a primer that should be viewed as such.Fusaro's second, Energy Derivatives: Trading Emerging Markets, is the companion piece to this book and adds the newer commodities of weather, emissions, bandwidth and coal derivatives. I recommend it as well.

Energy Risk Management by Peter Fusaro offers the necessary primer for a basic understanding of a complex topic. The author and his contributors explore oil, gas and power markets as well as options theory for energy, value-at-risk for electric power, and credit risk for energy companies. It is written in an easy to understand style for the reader. I highly recommend this book as well as Fusaro's new book, Energy Derivatives: Trading Emerging Markets (2000). I give the book five stars.

Peter Fusaro edits and contributes to what has become one of the standards for those wishing to learn about energy risk management. Certainly there are more complex books on energy risk management written by quants for quants but Fusaro's book is squarely targeted at those wishing to get a broader handle on energy risk management. In that regard, it more than meets its mark.

This book is definitely not worth its price. Basic option theory and knowledge on VAR is wrongly interpreted. The book gives no insight on what energy risk management realy stands for. Utterly disappointed !

This book explains a very complex subject and makes it understandable for readers for oil, gas and power. It simplifies complexity. I found the chapter on European Electricity Trading Markets extremely helpful. The chapter on the deregulated U.S. gas market has some good insite especially as it applies to the deregulating U.S. power industry. I would think anyone in the Utility industry would find this book useful as they try and compete in this business.

Energy Risk Management is great primer for those interested in limiting their risk exposure to volatile International energy markets which are in the process of deregulating. Fusaro and his cast of contributing authors examine a wide variety of energy sectors and give practical examples of risk management techniques in easy to understand terminology.

I was so pleased with the content of this book I even recommended it to a friend who has been trading International financial instruments for the past 12 years and is looking to get into the energy risk management field. When I asked him for his reaction to the book, he said it was "excellent".

For greater detail, I also plan to read the author's follow-up work, "Energy Derivatives: Trading Emerging Markets" which looks at new energy related markets such as weather, emissions and bandwidth trading.

Energy Risk Management is great primer for those interested in limiting their risk exposure to volatile International energy markets which are in the process of deregulating. Fusaro and his cast of contributing authors examine a wide variety of energy sectors and give practical examples of risk management techniques in easy to understand terminology.

I was so pleased with the content of this book I even recommended it to a friend who has been trading International financial instruments for the past 12 years and is looking to get into the energy risk management field. When I asked him for his reaction to the book, he said it was "excellent".

For greater detail, I also plan to read the author's follow-up work, "Energy Derivatives: Trading Emerging Markets" which looks at new energy related markets such as weather, emissions and bandwidth trading.