Energy prices gone wild

Energy prices gone wild

Welcome back. It seems I was wise not to write about the market implications of the debt limit kerfuffle; a truce is set to put the whole mess off until the end of the year. Like everyone else, I watch the prices of US credit default swaps rise as these dumb arguments escalate, but always assume it is ultimately SFSN (sound and fury signifying nothing). Maybe one day I will be wrong. Email me: [email protected]

Energy prices, inflation, and growth

Here’s a chart:

That’s various global fossil fuel prices, rebased to 100 six months ago. The only problem with putting them all together means that the absolutely bonkers rise in the prices of natural gas in the UK and liquid natural gas in Asia overshadow the merely staggering doubling of Chinese coal and US natural gas prices. The objectively impressive 30 per cent rise in Brent crude prices looks positively limp by comparison.

The big question about the run-up in global energy costs is how long it will last. That is, are we looking at a temporary supply/demand imbalance — a much larger version of, say, the wild rise in US lumber prices, which peaked at four times normal levels in May only to