you haven't provided any evidence that somehow the price of agricultural commodities is divorced from supply and demand. That's a pretty bizarre statement, and one that would need a lot of evidence to be taken seriously.
Evidence??? Rice prices doubled since August and wheat prices went up 87% in two month.
No shortages of rice are being reported, so supply is OK. As for demand, it hasn't doubled, etc. in that short period.
There were fears of shortages that caused hoarding a few months ago, but the shortages didn't materialize. Same for wheat.
Actually there's no shortage of oil or gasoline. Do you see gas lines? And the current price of oil is way out of proportion to the actual costs of production. That's why Exxon has had the huge profits it has had for the last 3 or so years.
Exxon doesn't set the price of oil and neither does OPEC. OPEC did set prices in the 70s and early 80s, but that stopped.
Demand has grown for oil but not at the rate prices have risen.
As for something being bizarre, it's the world oil market right now. The demand feedback mechanism is broken because the world market is bifurcated. In many countries....Russia, China, Brazil, and throughout the ME, for ex., state-owned oil companies sell more cheaply to their own citizen consumers. People refer to this as Government subsidized which might be the wrong term. These governments aren't losing money with this practice, they are just pricing their product closer to the real costs of production and are doing this for their own people.
OTOH, in OUR country, on OUR oil exchanges, OUR traders have bid
the price of oil up to current levels. The price is passed right along to businesses and consumers. ME oil companies who enjoy surplus production and can sell on the open market make a fortune, while our businesses and consumers alone
bear the brunt. Even the EU, which in the same position, is spared some of the pain by virtue of having a stronger currency.
So we are inflicting major pain primarily to ourselves only. That's bizarre, if you think about it. |
