On Apr 21, 2:04=A0am, "(David P.)" <imb...@[EMAIL PROTECTED]
> wrote:
> http://www.nytimes.com/2008/04/21/opinion/21krugman.html
>
> Op-Ed Columnist
> Running Out of Planet to Exploit
>
> By PAUL KRUGMAN
> Published: April 21, 2008
>
> Nine years ago The Economist ran a big
> story on oil, which was then selling for
> $10 a barrel. The magazine warned that
> this might not last. Instead, it suggested,
> oil might well fall to $5 a barrel.
Or for idiots who even invest in oil, the the only thing you
should really say is:
"Idiots who even believe oil exists are not only idiots, they are
extremal idiots.
The only thing that exists are barrels, idiots, and derivitives
morons".
>
> In any case, The Economist asserted,
> the world faced =93the prospect of cheap,
> plentiful oil for the foreseeable future.=94
>
> Last week, oil hit $117.
>
> It=92s not just oil that has defied the com-
> placency of a few years back. Food
> prices have also soared, as have the
> prices of basic metals. And the global
> surge in commodity prices is reviving
> a question we haven=92t heard much since
> the 1970s: Will limited supplies of natural
> resources pose an obstacle to future
> world economic growth?
>
> How you answer this question depends
> largely on what you believe is driving the
> rise in resource prices. Broadly speaking,
> there are three competing views.
>
> The first is that it=92s mainly speculation =97
> that investors, looking for high returns at
> a time of low interest rates, have piled
> into commodity futures, driving up prices.
> On this view, someday soon the bubble
> will burst and high resource prices will
> go the way of Pets.com.
>
> The second view is that soaring resource
> prices do, in fact, have a basis in funda-
> mentals =97 especially rapidly growing
> demand from newly meat-eating, car-
> driving Chinese =97 but that given time
> we=92ll drill more wells, plant more acres,
> and increased supply will push prices
> right back down again.
>
> The third view is that the era of cheap
> resources is over for good =97 that we=92re
> running out of oil, running out of land to
> expand food production and generally
> running out of planet to exploit.
>
> I find myself somewhere between the
> second and third views.
>
> There are some very smart people =97
> not least, George Soros =97 who believe
> that we=92re in a commodities bubble
> (although Mr. Soros says that the bubble
> is still in its =93growth phase=94). My problem
> with this view, however, is this:
> Where are the inventories?
>
> Normally, speculation drives up commodity
> prices by promoting hoarding. Yet there=92s
> no sign of resource hoarding in the data:
> inventories of food and metals are at or
> near historic lows, while oil inventories
> are only normal.
>
> The best argument for the second view,
> that the resource crunch is real but tem-
> ****ary, is the strong resemblance between
> what we=92re seeing now and the resource
> crisis of the 1970s.
>
> What Americans mostly remember about
> the 1970s are soaring oil prices and lines
> at gas stations. But there was also a
> severe global food crisis, which caused
> a lot of pain at the supermarket checkout
> line =97 I remember 1974 as the year of
> Hamburger Helper =97 and, much more
> im****tant, helped cause devastating
> famines in poorer countries.
>
> In retrospect, the commodity boom of
> 1972-75 was probably the result of rapid
> world economic growth that outpaced
> supplies, combined with the effects of bad
> weather and Middle Eastern conflict.
> Eventually, the bad luck came to an end,
> new land was placed under cultivation,
> new sources of oil were found in the
> Gulf of Mexico and the North Sea, and
> resources got cheap again.
>
> But this time may be different: concerns
> about what happens when an ever-growing
> world economy pushes up against the limits
> of a finite planet ring truer now than they
> did in the 1970s.
>
> For one thing, I don=92t expect growth in
> China to slow sharply anytime soon.
> That=92s a big contrast with what happened
> in the 1970s, when growth in Japan and
> Europe, the emerging economies of the
> time, down****fted =97 and thereby took a
> lot of pressure off the world=92s resources.
>
> Meanwhile, resources are getting harder
> to find. Big oil discoveries, in particular,
> have become few and far between, and
> in the last few years oil production from
> new sources has been barely enough to
> offset declining production from
> established sources.
>
> And the bad weather hitting agricultural
> production this time is starting to look
> more fundamental and permanent than
> El Ni=F1o and La Ni=F1a, which disrupted
> crops 35 years ago. Australia, in particular,
> is now in the 10th year of a drought that
> looks more and more like a long-term
> manifestation of climate change.
>
> Suppose that we really are running up
> against global limits. What does it mean?
>
> Even if it turns out that we=92re really at or
> near peak world oil production, that
> doesn=92t mean that one day we=92ll say,
> =93Oh my God! We just ran out of oil!=94 and
> watch civilization collapse into =93Mad Max=94
> anarchy.
>
> But rich countries will face steady
> pressure on their economies from rising
> resource prices, making it harder to raise
> their standard of living. And some poor
> countries will find themselves living
> dangerously close to the edge =97 or over it.
>
> Don=92t look now, but the good times may
> have just stopped rolling.
> .
> .
> --
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