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Originally Posted by Baraka_Guru
The piece below suggests that oil markets shouldn't be compared to the housing market, nor should they be compared to the tech bubble. Some interesting points below that outline the contrast....
Futures matter, sure, but the overall impact is likely to be minimal at most. I've thought this for a while now. I will maintain my position: Oil prices are up due to a lack of increased capacity (via new sources) and diminishing output (think Mexico), in conjunction with an overall global creeping demand. This will only get worse.
But it is political as well. This is a complex issue, which is why no one has any clear solutions. We tend to look for the silver-bullet solution (or magic pill, if you prefer) but this is oil. It isn't that simple. Throwing food into the mix only adds to the laundry list of pressures. It's hitting a critical mass. The question is, what are we going to see down the road that will make it worse?
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It makes sense to approach the problems from many angles at once. The problems are certainly coming at us from several directions. I think you're right trying to find a "silver bullet" isn't the right approach.
As for what are we going to see down the road? I think we're already seeing some weather that could have a noticeable effect. The US mid-west flooding isn't going to help with food prices. Then there are other natural events, the recent earthquake in China comes to mind. All we need now is a huge volcanic eruption. I read an article a while back about Krakatau and it's eruption back in the late 1800's. It effected crops almost everywhere, if I read it correctly. Could end up being an even bigger mess world wide.