Ping.
Just more testimony to the FACT that the U.S. must become more energy independent. There are ways to fight this battle, but special interests continue to dominate this major issue.
Thanks.
The big thing that is happening is China. A few years ago, the price of crude oil dropped into single digits because of a recession in Asia (and during this time there were coups and coup attempts in producing countries, because they are more hostage to their single commodity than we are; low commodity prices for a single commodity producer means blood in the streets).
As Asia recovered from its recession, the price came back into its normal range, and now China's economy is expanding. An economy that size takes up a huge proportion of the world's commodities when it expands. After all the years of stagnation under Mao we got used to ignoring China as an economic factor, but we can't do that anymore.
It isn't only fuel that is rising, it is concrete and steel as well.
That is the elephant in the room. Its like looking blaming your airconditioner for Global Warming and ignoring variations in solar energy.
China is investing in oilfields in Kazakhstan, and is planning its own pipelines into the region, as well as another pipeline through Burma to simplify its oil supply. But as China modernizes its economy, from now on, they are going to be a significant factor in all commodity markets.
Another thing; the big price rise in the seventies had in retrospect a lot to do with disconnecting the dollar from gold. The rise in the price of oil tracked the fall in the value of the dollar. Something similar is happening now. We are, I think, deliberately following a weak dollar strategy to encourage US based manufacture, and this shows up in high commodity prices. We blame the commodity, but its the dollar.