Editor's letter

This year has already kicked off with energy price spikes and concerns over security of supply, and these look set to remain a dominant theme this year. Whether it was driven by economics or politics, the Russia/Ukraine gas dispute flags up the risks to all energy consumers of being too dependent on one fuel source from one region. It also clearly demonstrates the new globalisation and interlinkage of different energy markets.

If the oil prices rises of 2004 were driven largely by demand, and the price spikes of 2005 caused mainly by supply concerns, then 2006 looks set to have its fair share of both. The US Energy Information Administration forecasts domestic energy demand to continue rising by 2% in 2006, despite the rising price of oil. WTI crude oil is forecast to average $63 per barrel in 2006 up from $57/bbl in 2005.

In this issue, the International Energy Agency's chief economist Fatih Birol talks exclusively to Energy Risk about his forecasts of tight markets and high prices in the coming years (see page 52).

All these fundamentals will ensure that the cost of energy, and managing that cost remains a major focus throughout this year. The outlook for the energy markets, and for energy traders themselves, is discussed in our Outlook for 2006 on page 37.

On another note, Energy Risk is sad to say goodbye to our US-based reporter Joe Marsh, who is joining our sister magazine Asia Risk. Good luck in Hong Kong, Joe!

Finally, as we progress into another year, Energy Risk would like to wish all its readers a healthy, happy and wealthy 2006. PS: Thanks to everyone who voted in our dealer and brokers rankings - the results will be published in the next issue.