Ehud I. Ronn
Professor, Department of Finance | The University of Texas at Austin, McCombs School of Business
Austin, TX, UNITED STATES
Energy finance, valuation of energy commodity-contingent securities
Areas of Expertise (9)
Valuation of Capital Assets
Bonds
Interest Rates
Energy Risk
Energy Management
Energy Finance
Energy Derivatives
Energy-Consulting
Financial Risk Management
Biography
Ehud Ronn is a finance professor at the McCombs School of Business at The University of Texas at Austin. He is an expert on energy finance, derivatives and financial risk management.
Ronn serves as the Co-Director for the Energy Management Center. His research has led advances in the field of finance. Ronn has published over 30 papers on banking, investments, interest rate-sensitive instruments and energy derivatives in academic and practitioner literature, including Journal of Finance, Journal of Business, American Economic Review and Energy & Power Risk Management.
Prior to joining UT Austin, Ronn was a faculty member of the business school at the University of California, Berkeley, and the University of Chicago.
In addition to his impressive academic background, Ronn has also worked for several prestigious companies such as Morgan Stanley & Co. and Merrill Lynch & Co. in high profile positions. Since 1993, he has served as a consultant to Federal and State government agencies, an insurance company, investment banks, a risk advisory firm and an energy-derivative software vendor in the interest-rate and energy-commodity areas.
Media
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Education (3)
Stanford University: Ph.D., Finance 1991
Technion (Israel): M.Sc., Economics 1978
Technion (Israel): B.Sc., Economics and Management 1976
Media Appearances (13)
What's the Future of Offshore Drilling?
Houston Public Media radio
2018-04-10
Oil and gas drillers showed a modest interest in growing their projects in the nation’s largest-ever Gulf of Mexico lease sale. It came amid the Trump administration’s push to expand drilling in federal waters. But, according to a new analysis from Reuters, there may not be high demand in future offshore auctions.
Another day of panic buying at Austin gas pumps
CBS Austin online
2017-09-01
"Prices may be higher for a while, and a while may be for a month or more, but I think we're coming back to more moderate types of normal conditions," said UT Professor of Finance Ehud Ronn.
Which came first: low oil prices or declining stocks?
Marketplace online
2016-01-26
The stock market and oil market have high correlation levels and McCombs finance professor, Ehud Rond suggests that this is related to low demand. He states the concern about global growth in the economy is reducing the demand for oil.
5 Truths CEOs Need to Know About Oil Prices
Texas CEO print
2015-03-14
“We’re in contango, which is unusual,” says Ehud Ronn, professor of finance at McCombs. Ronn’s research focuses on the valuation of energy commodity-contingent securities. Contango is an upward sloping forward price curve, where the spot price today is cheaper than the futures price a year or more out. For refiners (and those with access to storage, such as on VLCCs), that presents an arbitrage opportunity, says Ronn. It’s more profitable to buy at the current spot price, store, and sell forward to lock in the difference.
It Looks Like Financial Markets Are Betting On Keystone XL
State Impact, NPR member station online
2015-01-30
“So one of the things we like to pride ourselves in finance is that markets are informative, they tell us something about the future,” says Ehud Ronn, a Finance Professor at the University of Texas at Austin. ”In this particular case, I’m looking at the spread in the futures prices between Brent and WTI.” Ronn has been studying graphs that show where markets are betting the price of U.S. oil and international crude will be relative to each other. The graphs show a clear divergence. Markets are betting U.S. crude will keep dropping in price relative to its European counterpart.
How Crude Oil Prices Drive the Cost of Gasoline
Sate Impact, NPR member stations online
2015-01-26
“That’s one of the things that makes [oil markets] interesting. There’s a geographical component to the products, as well as a blend, that we need to take into account” Ehud Ronn directs the Center for Energy Finance Education and Research at UT Austin. The price for Brent or WTI is determined not only by traditional supply and demand, but by where financial markets think oil will be priced at out into the future.
Demand dries up for Texas tea just as the Lone Star State gets used to permanent boom time
The Irish Times online
2015-01-26
Where next for the US oil price? Ehud I Ronn, a professor of finance at the University of Texas, has researched oil price to get a handle on just how low they could go. “I see this as primarily a demand-driven phenomenon,” Ronn said. “The demand for oil has declined due to the fall off in growth in Asia and in Europe. “I have examined whether oil prices are affecting equity prices or the other way around. It seems to me that equity prices are driving oil prices, although I recognize the importance of the geopolitical issues some people are also pointing to – that is, the big producer in the Persian gulf trying to hurt its regional competitors in the US.
Enbridge pipeline expansion, larger than Keystone, drawing some Dane County skeptics
Wisconsin State Journal online
2015-01-11
Ehud Ronn, a University of Texas business professor who specializes in energy industry finance, said producers want more avenues to move petroleum, and rail and highway transport pose greater hazards than pipelines. “Although pipelines have encountered their own safety issues, they are the safest and most efficient way to transfer oil over long distances,” Ronn said.
Enbridge pipeline expansion larger than Keystone, drawing some Dane County skeptics
Wisconsin State Journal online
2015-01-11
Ehud Ronn, a University of Texas business professor who specializes in energy industry finance, said producers want more avenues to move petroleum, and rail and highway transport pose greater hazards than pipelines. “Although pipelines have encountered their own safety issues, they are the safest and most efficient way to transfer oil over long distances,” Ronn said...
Funding the Islamic State
U.S. News & World Report online
2014-09-11
“Go after the end users, the people seeking to refine it and bring it to the market.” says Ehud Ronn, an economics professor at the University of Texas at Austin “When [the] Treasury [Department] and the Europeans imposed multilateral sanctions on Iran, it was having a significant effect: on inflation, on the economy. So when you have multilateral sanctions, they do seem to have some bite to it.”...
The Evolving Bond Market
CFO online
2013-03-21
A modest yield premium over comparable debt trading in the secondary market is common; it helps attract investor interest. But what’s modest? Goldberg and Ehud Ronn, a finance professor at the University of Texas at Austin, recently studied new-issue premiums for nearly 1,500 bonds issued by nonfinance companies from 2008 through January 2012. They calculated that the risks associated with buying that debt merited a kicker of 12.9 basis points, on average. But in a paper soon to be published by The Journal of Fixed Income, they report that the actual premium averaged 22.5 basis points.
Between Barack and a Hard Place
Forbes online
2008-07-24
Ehud Ronn, an economist and director of the Center for Energy Finance Education & Research at the University of Texas, says the kink in futures prices, a condition known as contango, fits precisely with the theory that traders believe a U.S. military attack on Iran is more likely after the election than before. The futures price of oil spikes in early November. Inference: The market believes that Obama, the likely Democratic choice, will win. “If the Republican candidate is elected, the thinking goes, the Administration will say, ‘This is your baby, you handle it,’” Ronn explains. “But if the Democrat is elected, they’ll say, ‘We can’t trust him, we’ll handle it ourselves.’”
Which came first: low oil prices or declining stocks?
Marketplace
2016-01-26
The stock market and oil market have high correlation levels and McCombs finance professor, Ehud Rond suggests that this is related to low demand. He states the concern about global growth in the economy is reducing the demand for oil.
Articles (6)
Fine-Tuning a Corporate Hedging Portfolio: The Case of an Airline
Journal of Applied Corporate Finance
2013-12-01
Industrial companies typically face a multitude of risks that could cause significant fluctuations in their cash flow. This is a case study of the hedging strategy adopted by an international air carrier to manage its jet‐fuel price exposure.
Intra-Day Risk Premia in European Electricity Forward Markets
Journal of Energy Markets
2009-12-01
In this research we find such a positive risk premium, leading to a statistically significant negative market price of risk and the implication that forward prices are upward-biased predictors of expected electricity spot prices.
A Simple Model for Time-Varying Expected Returns on the S&P 500 Index
Journal of Investment Management
2009-03-01
This paper presents a parsimonious, implementable model for the estimation of the short- and long-term expected rates of return on the S&P 500 stock market Index.
The Impact of Large Changes in Asset Prices on Intra-Market Correlations in the Domestic and International Markets
Financial Review
2009-08-01
This paper considers the impact and implications of "large" changes in asset prices on the intra-market correlations in the domestic and international markets.
Valuation of commodity-based swing options
Management Science
2004-07-01
This paper presents a numerical scheme for the valuation of swing options calibrated for the case of natural gas.
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