The Guardian has a leaked copy of a World Bank study that finds biofuels to be the biggest culprit in global food price increases. This finding will not only feed calls to scrap biofuels (save perhaps those derived from sugar) but may lead to a recognition that resource challenges cannot be pursued in isolation. In […]
Read more...It’s gratifying when someone takes on a topic I had wanted to address and does a better job than I could have. Various readers have explained how prices are formed in oil markets, most importantly, how for the vast majority of oil sold, prices are specified in long-term supply contracts and the benchmark is not […]
Read more...Readers have taken to throwing brickbats when I post material that suggests that raising interest rates (at least in advanced economies) might not be a good move right now. We’ve said before that the reason the Fed kept rates too low too long was it looked at inflation as strictly a domestic phenomenon and ignored […]
Read more...Oil prices continue their seemingly relentless march upwards, breaching the $143 a barrel level Tuesday. Even the headlines are selling the bull’s case. Note that a Bloomberg’s story was titled, “Crude Oil Rises a Second Day as IEA Predicts `Tight’ Supplies Through 2013.” Yet what did the text say? The IEA said in a report […]
Read more...The old saying is that the cure for high prices is high prices. In the case of commodities, high prices reduce demand and also lead to efforts to expand supply. That has happened with wheat, which witnessed a sharp price decline today as it was revealed that US farmers had increased their wheat acreage. Experts […]
Read more...Last week, we had put up a perplexed post, wondering out loud as to why some prominent Democratic senators (Charles Schumer, John Kerry, and Claire McCaskill) were calling to block contracts being signed between oil companies and the Iraq government. Narrowly, these deals would help get the faltering country back on its feet economically, both […]
Read more...Alert readers pointed us to new sightings of heightened credit market worries from Barclays via the Telegraph and Bill Fleckenstein via Calculated Risk. What distinguishes them from normal patter about the debt markets is the urgency of their alarms (hat tip Dwight and doc) The irony here is that the Fed, as Tim Duy points […]
Read more...Daniel Dicker, a former oil trader writing at TheStreet.com, contends that there is a way to test the hypothesis that speculation is influencing oil prices (a view that Dicker supports). Exchanges could impost a “liquidiation only” requirement, which was last used to break the Hunt brothers’ attempted corner of the silver market in the early […]
Read more...Some readers have suggested increasing tariffs as a way to reduce our trade deficit and shield US workers from foreign competition. High energy prices may be having the same effect. Increased transportation costs are leading companies to rethink how they source their products and shift to local producers where possible. A Financial Times story discusses […]
Read more...Please have a look at our article, “Barrel Fever: Does Anyone Know How Much Oil There is in the World?” We’ve covered some of the same ground in posts here, but hopefully readers will still enjoy it.
Read more...Although we don’t always agree with his views, we are fans of Thomas Palley posts because he is willing to question economic orthodoxy. We were particularly taken with his piece, “Demythologizing Central Bankers and the Great Moderation.” In his latest offering, Palley disputes the idea that the recent runup in oil prices is entirely the […]
Read more...Have you ever watched a movie and suddenly hit a section that doesn’t quite make sense? Usually, I figure I missed a crucial twist, like a envelope being slipped to the chief baddie, or the fact that the receptionist is the detective in the opening scene. I’m throwing this one open to readers, because it […]
Read more...More signs of high gas prices leading to reduced demand. The Bloomberg article is written somewhat unclearly. The 2.7% fall in retail gas purchases is in comparison to the prior year.. From Bloomberg: U.S. gasoline demand fell 2.7 percent last week, a sign motorists are cutting back on vacation plans as pump prices touchrecords, a […]
Read more...There has been ample speculation on whether the Saudis are truly close to tapped out as far as current oil production is concerned. The overwhelming majority believes that declining production is due to falling yields from their biggest oilfield, Gwahar, which has not been fully compensated for by increased output from other fields. A minority […]
Read more...Some optimists on the agriculture front, such as Nobel prize winning economist Gary Becker, have argued that increasing the productivity of farming would solve the problem of skyrocketing grain and food commodity prices. Only roughly 30% of crop-raising is done according to advanced techniques; if much of the rest of the land under cultivation was […]
Read more...