· 2 min read
illuminem summarizes for you the essential news of the day. Read the full piece here in Oil Price or enjoy below
🗞️ Driving the news: Banking and the electricity industry, particularly in the United States, are considered to be confidence games due to their financial models
• Both industries rely heavily on the assurance of their stakeholders, with potential imbalances between their short-term obligations and long-term assets posing risks
🔭 The context: Banks use short-term deposits to fund long-term loans, much like how electricity utilities make long-term investments to serve customers who pay monthly without a lifetime service commitment
🌎 Why does it matter for the planet: The potential disruption of these financial models can impact the stability and reliability of services that are vital for society, such as the supply of electricity
• This could also affect the pace and effectiveness of the transition towards cleaner energy alternatives, which is crucial for mitigating climate change
⏭️ What's next: The government may need to provide assurance to these industries, particularly for utilities, in a manner similar to the banking industry
💬 One quote: "Like banks, utilities also have a mismatch between long-term assets and short-term obligations. If, at any point, utility investors lose confidence in the industry, it will very quickly have difficulty continuing its financing processes." (Leonard S.Hyman, economist and financial analyst)
Click for more news covering the latest on energy
