jai hanuman

America's Energy Policy: Coming to Terms with Reality

1. too much demand.

2. too much loose money.

3. growth is far more important politically than inflation. corollary - shortage of natural resources, first leading to dramatic price rises, then political disturbances, then wars over resources.

1 and 2 are related, btw.

America's Energy Policy: Coming to Terms with Reality

there are two main reasons for the oil/commodity explosion:

1. too much demand. resources are finite (yes, sorry to tell you that). now get used to it. stop wasting them and use them wisely. that means smaller cars and public transport, too.

2. too much one way leverage in the futures markets. the commodity markets have finally figured out that growth trumps inflation in the Fed's dual mandate. Since the Fed will pump growth under any circumstance, inflation is bound to rise. The easiest way to profit from that is hard assets. Hence the one way tickets in the futures markets.
Another way of looking at this is that the Fed will not take away the punch bowl. That job will now be done by the commodity traders.

3. Too much money around with not enough productive investment to chase (a quaint idea anyway in Greenspan/Bernanke Fed whose main mandate has moved on to supporting investment bank bonuses).