Indiary

Follow us
Back to Flash&Facts

Once the Prices become Prohibitive

In the last century the prices of commodities had been cut by half. But, on the contrary, in this first decade of the new century prices increased more than two times! Resource prices during most of the 20th century whether it is food or energy declined despite a major increase in the world's population. The new Mc Kinsey report shows that prices fell because of combination of new low-cost sources of supply and technological innovation. But several factors and first and foremost a strong demand from emerging markets especially in Asia create a risk that the world might enter a new era of high and volatile resource prices. This report underlines that " up to 3 billion people could join the middle-class, boosting demand at a time when obtaining new resources could become more difficult and costly " and above all " that the capital needed each year to create a resource revolution will rise from roughly $ 2 trillion today to more than $ 3 trillion " ! And yet there is already a fight for food in many countries and a need to build more cities and infrastructure. As a result we use more and more commodities to manufacture other commodities. Energy represents between 15% and 30% of the total value of agricultural products such as fertilizers. And when crude oil hits regularly $100 a Barrel it becomes profitable to transform corn in biofuel. The development of shale gas will only be an interlude in this frenetic endeavor to find raw-materials. The overall trend shows that research and development of natural resources will become increasingly more expensive. $700 billion has been spent in 2013 to search and exploit oil and gas - almost 1% of the world's GDP- ! The issue will not be, in the short-term, the depletion of natural resources but their rising prices.

Post a comment

Please check that the information in the fields here below is correct.

Your comment is awaiting approval and will soon appear below!

Comments :

  • No comments
Created by BlueLeaf.ch